<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1996
REGISTRATION NO. 333-14691
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
Amendment No. 2 to
Form S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------------------
AMERICA WEST AIRLINES, INC.
(Exact name of registrant as specified in governing instruments)
<TABLE>
<S> <C>
DELAWARE 86-0418245
(State of incorporation) (I.R.S. Employer Identification No.)
STEPHEN L. JOHNSON
SENIOR VICE PRESIDENT -- LEGAL AFFAIRS
AMERICA WEST AIRLINES, INC.
4000 EAST SKY HARBOR BOULEVARD 4000 EAST SKY HARBOR BOULEVARD
PHOENIX, ARIZONA 85034 PHOENIX, ARIZONA 85034
(602) 693-0800 (602) 693-0800
(Address of principal executive offices) (Name and address of agent for service)
</TABLE>
Copies to:
<TABLE>
<S> <C>
DAVID BARBOUR ELLIOT GEWIRTZ
DAVID A. ALLEN ARNOLD B. PEINADO, III
ANDREWS & KURTH L.L.P. MILBANK, TWEED, HADLEY & MCCLOY
4400 THANKSGIVING TOWER ONE CHASE MANHATTAN PLAZA
DALLAS, TEXAS 75201 NEW YORK, NEW YORK 10005
(214) 979-4400 (212) 530-5000
</TABLE>
------------------------------------
Approximate date of commencement of proposed sale to public: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT* OFFERING PRICE* REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------
Pass Through Certificates........ $230,000,000 100% $230,000,000 $69,696.97
</TABLE>
- --------------------------------------------------------------------------------
* Estimated solely for purposes of calculating the registration fee.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PROSPECTUS (Subject to Completion)
Issued November , 1996
$218,560,054
[AMERICA WEST LOGO]
America West Airlines
1996-1 Pass Through Trusts
PASS THROUGH CERTIFICATES, SERIES 1996-1
------------------------
Each Pass Through Certificate (collectively, the "Certificates") will
represent a fractional undivided interest in one of the five America West
Airlines 1996-1 Pass Through Trusts (the "Class A Trust", the "Class B Trust",
the "Class C Trust", the "Class D Trust" and the "Class E Trust" and,
collectively, the "Trusts") to be formed pursuant to a pass through trust
agreement (the "Basic Agreement") and five separate supplements thereto (each, a
"Trust Supplement" and together with the Basic Agreement, collectively, the
"Pass Through Trust Agreements") between America West Airlines, Inc. ("America
West" or the "Company") and Fleet National Bank, as trustee under each Trust
(the "Trustee"). The Certificates to be issued by the Class A Trust, the Class B
Trust, the Class C Trust, the Class D Trust and the Class E Trust are referred
to herein as "Class A Certificates", "Class B Certificates", "Class C
Certificates", "Class D Certificates" and "Class E Certificates", respectively.
No Certificate issued by a Trust will have any rights, benefits or interests in
respect of any other Trust. Pursuant to the Intercreditor Agreement (as defined
herein), (i) the Class B Certificates will be subordinated in right of payment
to the Class A Certificates, (ii) the Class C Certificates will be subordinated
in right of payment to the Class B Certificates, (iii) the Class D Certificates
will be subordinated in right of payment to the Class C Certificates and (iv)
the Class E Certificates will be subordinated in right of payment to the Class D
Certificates. Payments of interest on the Class A, Class B, and Class C
Certificates (but not the Class D and Class E Certificates) will be supported by
a separate liquidity facility for the benefit of the holders of such
Certificates, each such facility to be provided by Kredietbank N.V., acting
through its New York branch (the "Liquidity Provider"), in an amount sufficient
to pay interest thereon at the applicable interest rate for such Certificates on
three successive distribution dates. (continued on the following page)
------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 25 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
FINAL EXPECTED PRICE TO
PASS THROUGH CERTIFICATES PRINCIPAL AMOUNT(1) INTEREST RATE DISTRIBUTION DATE(1) PUBLIC(2)(3)
- ---------------------------- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Class A $ 100,661,333 % July 2, 2009 100%
Class B 37,748,000 January 2, 2008 100%
Class C 37,748,000 July 2, 2004 100%
Class D 29,249,875 July 2, 2002 100%
Class E 13,152,846 July 2, 2006 100%
</TABLE>
- ---------------
(1) The principal amounts and the final expected distribution dates are
indicative only and subject to change.
(2) Plus accrued interest, if any, from November , 1996.
(3) The aggregate commission payable to the Underwriters varies by Trust and
aggregates to $ , which constitutes % of the principal amount of
the Certificates offered hereby. The aggregate commission and certain other
expenses, estimated at approximately $ , will be paid by
U.S.-domiciled subsidiaries of GPA Group plc. All proceeds of the
Certificates will be used by the Trusts to purchase the Equipment Notes from
the Owner Trustees (as defined herein).
------------------------
The Certificates offered hereby are offered by the Underwriters, subject to
prior sale, when, as and if accepted by the Underwriters and subject to approval
of certain legal matters by Milbank, Tweed, Hadley & McCloy, counsel for the
Underwriters. It is expected that delivery of the Certificates in book-entry
form will be made on or about November , 1996 through the facilities of The
Depository Trust Company, against payment therefor in immediately available
funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
CITICORP SECURITIES, INC.
LEHMAN BROTHERS
SALOMON BROTHERS INC
<PAGE> 3
(continued from cover page)
The property of the Trusts will include, among other things, equipment
notes (the "Equipment Notes") to be issued on a nonrecourse basis by the
trustees (each, an "Owner Trustee") of separate owner trusts (each, an "Owner
Trust") in connection with 11 separate leveraged lease transactions to refinance
the current indebtedness of such Owner Trustees previously incurred to finance
the purchase of eight Airbus Industrie model A320-231 aircraft (collectively,
the "Aircraft") and three International Aero Engines model IAE V2500-A1 engines
(collectively, the "Spare Engines" and, together with the Aircraft, the
"Equipment") which will be leased to America West. The Equipment Notes in
respect of each Aircraft and Spare Engine will be issued in up to five series
(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"). Each Trust will purchase one series of Equipment Notes issued with
respect to some or all of the Equipment such that all of the Equipment Notes
held in each Trust will have an interest rate corresponding to the interest rate
applicable to the Certificates to be issued by such Trust. The maturity dates of
the Equipment Notes acquired by each Trust will occur on or before the final
expected distribution date applicable to the Certificates to be issued by such
Trust. The Equipment Notes issued with respect to each Aircraft and Spare Engine
will be secured by a security interest in such Aircraft or Spare Engine and an
assignment of certain of the related Owner Trustee's rights under the lease
relating thereto (each, a "Lease"), including the right to receive rentals
payable with respect to such Aircraft or Spare Engine by America West. Although
neither the Certificates nor the Equipment Notes are obligations of, or
guaranteed by, America West, the aggregate amounts unconditionally payable by
America West for lease of the Equipment will be at least sufficient to pay in
full when due all scheduled amounts required to be paid on the Equipment Notes
held in the Trusts.
All of the Equipment Notes held by each Trust will accrue interest at the
applicable rate per annum for such Trust, payable on January 2 and July 2 of
each year, commencing January 2, 1997. Interest paid on the Equipment Notes held
in each Trust will be passed through to Certificateholders (as defined herein)
of such Trust on each such date, in each case subject to the Intercreditor
Agreement. See "Description of the Certificates -- General" and "-- Payments and
Distributions".
Scheduled principal payments made on the Equipment Notes held in each Trust
will be passed through to the Certificateholders of each such Trust on January 2
or July 2 or both in certain years, commencing January 2 , 1997, in accordance
with the principal repayment schedule set forth herein under "Description of the
Certificates -- Pool Factors", in each case subject to the Intercreditor
Agreement.
Under each Pass Through Trust Agreement, a PTC Event of Default (as defined
herein) will occur if the Trustee fails to pay within ten business days of the
due date thereof: (i) the outstanding Pool Balance (as defined herein) of the
applicable Class of Certificates on the Final Legal Distribution Date (as
defined herein) for such Class or (ii) interest due on such Certificates on any
Distribution Date (as defined herein) (unless, in the case of the Class A, B or
C Certificates, the Subordination Agent (as defined herein) shall have made an
Interest Drawing (as defined herein) in an amount sufficient to pay such
interest and shall have distributed such amount to the Certificateholders
entitled thereto).
---------------------
Delivery of the Certificates is scheduled to be made against payment
therefor on November , 1996 (the "Closing Date"), without regard to the date
on which the Underwriters enter into a firm agreement to purchase the
Certificates. Accordingly, the Certificates will be subject to a settlement
cycle that exceeds three business days (such settlement cycle being referred to
herein as "Long Settlement"). Purchasers of Certificates should note that
initial trading of Certificates may be affected by the Long Settlement. See
"Underwriting".
Prior to their issuance there will have been no public market for the
Certificates offered hereby nor can there be any assurance that one will
develop. See "Risk Factors -- Factors Relating to the Certificates and the
Offering -- Absence of a Public Market for the Certificates".
2
<PAGE> 4
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AMERICA
WEST, THE UNDERWRITERS OR THE LIQUIDITY PROVIDER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AMERICA
WEST SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE CERTIFICATES PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT").
------------------------
AVAILABLE INFORMATION AND REPORTS TO CERTIFICATEHOLDERS
America West has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all amendments
and exhibits, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Certificates offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and to which reference is hereby
made. Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Commission. Reports and other information concerning America West can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549; The Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the Public Reference Room of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. The Company's
Class B Common Stock and Warrants to purchase Class B Common Stock are listed on
the New York Stock Exchange and the Company's registration statements, reports,
proxy and information statements and other information may also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005. On behalf of each Trust, the applicable Trustee will prepare and send
certain periodic reports concerning the Certificates and distributions made by
such Trust to the Certificateholders of such Trust. See "Description of the
Certificates -- Reports to Certificateholders".
The Company is a Delaware corporation. Its executive offices are located at
4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, and its telephone number
is (602) 693-0800.
3
<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of America West, which have been filed with the
Commission, are hereby incorporated by reference in this Prospectus:
Annual Report on Form 10-K for the year ended December 31, 1995.
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 1996.
All documents filed by America West pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Certificates offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. The Company's file number is 1-0140.
America West will provide without charge to any person to whom a copy of
this Prospectus has been delivered, upon written or oral request, a copy of any
or all of the foregoing documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to Patricia Penwell,
Corporate Secretary, America West Airlines, Inc., 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034, telephone number (602) 693-0800.
FORWARD LOOKING INFORMATION
This Prospectus contains various forward-looking statements and information
that are based on management's beliefs as well as assumptions made by and
information currently available to management. Such statements are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. See "Risk Factors -- Company Related Risks -- Forward Looking
Information May Prove Inaccurate".
4
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Available Information and Reports to Certificateholders................................ 3
Incorporation of Certain Documents by Reference........................................ 4
Forward Looking Information............................................................ 4
Prospectus Summary..................................................................... 6
Risk Factors........................................................................... 25
Use of Proceeds........................................................................ 34
Ratio of Earnings to Fixed Charges..................................................... 34
Capitalization......................................................................... 35
Selected Financial and Operating Data.................................................. 36
Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................... 38
Business............................................................................... 50
Management............................................................................. 63
Certain Transactions................................................................... 67
Description of the Certificates........................................................ 69
Description of the Liquidity Facilities................................................ 81
Description of the Intercreditor Agreement............................................. 85
Description of the Equipment and the Appraisals........................................ 89
Description of the Equipment Notes..................................................... 90
Certain U.S. Federal Income Tax Consequences........................................... 110
State Tax Considerations............................................................... 112
ERISA Considerations................................................................... 113
Underwriting........................................................................... 115
Legal Matters.......................................................................... 116
Experts................................................................................ 117
Index to Financial Statements.......................................................... F-1
Index of Certain Defined Terms......................................................... I-1
Aircraft Appraisals.................................................................... II-1
Equipment Notes Principal Payment Schedule............................................. III-1
</TABLE>
5
<PAGE> 7
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by reference to the detailed information appearing elsewhere in
this Prospectus.
Certain capitalized terms used herein are defined elsewhere in this
Prospectus on the pages indicated in the "Index of Certain Defined Terms"
appearing as Appendix I hereto, and all cross references herein refer to
sections of this Prospectus.
THE COMPANY
America West Airlines, Inc. is the ninth largest commercial airline carrier
in the United States, operating through its principal hubs located in Phoenix,
Arizona and Las Vegas, Nevada and a mini-hub located in Columbus, Ohio. The
Company believes that it is the lowest cost full service carrier in the United
States. At September 30, 1996, the Company served 53 destinations, including
five destinations in Mexico and one in Canada, with a fleet of 99 aircraft. The
Company offers service to an additional 21 destinations through an alliance
agreement with Continental Airlines, Inc. ("Continental ") and 17 commuter
service and regional destinations through an alliance agreement with Mesa Air
Group, Inc. ("Mesa ").
America West is the leading airline serving Phoenix and Las Vegas, based on
revenue passenger miles, with approximately 35% and 25% of total revenue
passenger miles, respectively, for the 12 months ended March 31, 1996. The
Phoenix and Las Vegas airports are the seventh and thirteenth largest airports
in the United States as measured by passenger enplanements. In addition, these
cities are among the fastest growing in the nation. The Company believes these
hubs are well positioned for continued growth due to their geographically
favorable locations with strategic access to key Southwestern and West Coast
markets, relatively low operating costs, year-round fair weather and modern,
uncongested facilities. Substantially all of the Company's passenger traffic is
channeled into or through its hubs, which serve as gateways for the Company's
route network. Through its hub and spoke system, the Company serves more markets
with greater frequency than would be possible with the same number of aircraft
in a point-to-point route system.
America West operates with one of the lowest cost structures among the
major U.S. airlines. The Company's operating cost per available seat mile
("ASM ") for the first nine months of 1996 was 7.92 cents, which was
approximately 13.1% less than the average operating cost per ASM of the eight
largest other domestic full service airlines. Management believes that the
Company's low cost structure is a significant competitive advantage relative to
other full service carriers and also enables the Company to compete effectively
against low cost carriers in its short-haul local markets. As a full service
airline, the Company believes that it distinguishes itself from other low cost
carriers by offering passenger services which include assigned seating,
participation in computerized reservation systems, interline ticketing, first
class cabins, baggage transfer and various other services.
STRATEGY
America West's strategy seeks to achieve additional revenue growth and
profitability by capitalizing on the Company's key competitive strengths while
maximizing financial flexibility. This strategy focuses on (i) strengthening the
Company's position in its existing hubs through strategic expansion, (ii)
maintaining its position as a leading low cost full service carrier, (iii)
operating a modern and efficient fleet and (iv) continuing to develop its
passenger base through key alliances. Principal elements of the Company's
strategy are as follows:
Strengthen Position in Existing Hubs through Strategic Expansion. America
West's strategic plan is designed to capitalize on its strong positions in its
Phoenix and Las Vegas hubs. In September 1995, the Company announced a two-year
plan to expand its principal hub operations and increase connecting traffic and
service to longer-haul nonstop markets. The growth plan is expected to increase
ASMs by 24% and add at least eight new cities to the Company's route network.
As the Company adds aircraft required to support the expansion of the
Phoenix hub, the Company intends to continue to optimize asset utilization
through the expansion of its night flight service to Las Vegas. By utilizing
aircraft for this service that would otherwise be idle overnight, the Company is
able to compete in a low cost market segment without diminishing asset
availability for use in its Phoenix operations.
Maintain its Position as a Leading Low Cost Full Service Airline. America
West is committed to maintaining its low cost structure, which the Company has
achieved primarily through its favorable labor costs
6
<PAGE> 8
per ASM and asset utilization enhancements. The Company has focused on
increasing productivity at all levels. From December 31, 1994 to September 30,
1996, the Company's workforce decreased by 14% despite an increase in aircraft
of 14%. Aircraft utilization has been enhanced through a restructuring of the
Company's route network including expansion of its Las Vegas night flight
program. The Company's fleet configuration, consisting of three aircraft types,
permits the Company to minimize spare parts inventories and simplify maintenance
and training operations.
Operate a Modern and Efficient Fleet. The Company enjoys operational
efficiencies due to its modern, fuel efficient fleet. At September 30, 1996, the
Company's fleet consisted of 61 Boeing 737s, 24 Airbus A320s and 14 Boeing 757s,
with an average age of approximately ten years. Most of the Company's existing
aircraft are held under leases, including leases on 20 aircraft expiring prior
to December 1998. As a result, in the event general economic conditions change
adversely, the Company may reduce its fleet size by not renewing expiring
aircraft leases.
Continue to Develop Passenger Base through Alliances. The Company plans to
continue to capitalize on its alliance agreement with Continental to further
expand the Company's passenger base while achieving cost savings through the
reduction of redundant labor and facilities. This agreement provides for
codesharing arrangements, coordination of flight schedules, linking of frequent
flyer programs, sharing of ticket counter space, coordination of ground handling
operations and joint purchasing and marketing efforts. Through codesharing, each
airline is able to offer additional destinations to the Company's customers
without materially increasing operating and capital expenses. Management
believes that its codesharing activities result in increased demand for travel
on America West and intends to pursue additional alliances as opportunities
warrant.
As a part of America West's ongoing strategy, the Company from time to time
evaluates opportunities for additional alliances and codesharing arrangements as
well as investment opportunities pursuant to which the Company may capitalize on
its key strengths and market position.
SUMMARY OF TERMS OF CERTIFICATES*
Set forth below is certain information about each Class of Certificates:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D CLASS E
CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Aggregate face amount.... $100,661,333 $37,748,000 $37,748,000 $29,249,875 $13,152,846
Rating:
Moody's................ A2 Baa2 Ba1 Ba3 B1
Standard & Poor's...... AA- A- BBB- BB B+
Initial LTV Ratio
(cumulative)(1)........ 39.9% 54.8% 69.8% 81.4% 93.4%
Expected principal
distribution window (in
years)................. 0.6-12.6 0.6-11.1 0.1-7.6 0.1-5.6 0.1-9.6
Initial average life (in
years)................. 8.7 6.7 3.8 2.1 2.4
Regular Distribution
Dates.................. January 2 January 2 January 2 January 2 January 2
and July 2 and July 2 and July 2 and July 2 and July 2
Final Expected
Distribution Date...... July 2, 2009 January 2, 2008 July 2, 2004 July 2, 2002 July 2, 2006
Final Legal Distribution
Date................... January 2, 2011 July 2, 2009 January 2, 2006 January 2, 2004 January 2, 2008
sec. 1110
protection(2).......... Yes Yes Yes Yes Yes
Liquidity Facility
coverage............... 3 semi-annual 3 semi-annual 3 semi-annual None None
interest interest interest
payments payments payments
Initial Liquidity
Facility amount(3)..... $ $ $ None None
</TABLE>
- ---------------
* The aggregate face amount, the initial LTV Ratio (as defined herein), the
expected principal distribution window, the initial average life, the Final
Expected Distribution Date and the Final Legal Distribution Date for each
Class of Certificates are indicative only and are subject to change.
(1) Assumes an aggregate appraised Equipment Value of $252,415,833. The initial
LTV Ratio for the Class E Certificates is computed using the four Aircraft
and the three Spare Engines securing the Series E Equipment Notes.
7
<PAGE> 9
(2) The benefits of Section 1110 of the Bankruptcy Code (as defined herein)
would be available by assignment to the Indenture Trustees (as and to the
extent described in further detail herein).
(3) For each Class of Certificates (other than the Class D and Class E
Certificates), the initial amount of the related Liquidity Facility will
cover the first three successive interest payments (without regard to any
future payments of principal on such Certificates).
EQUIPMENT NOTES AND THE EQUIPMENT*
Set forth below is certain information about the Equipment Notes held in
the Trusts and the Equipment securing such Equipment Notes:
<TABLE>
<CAPTION>
EQUIPMENT EQUIPMENT NOTES
- --------------------------------------------------------------- ----------------------------------------------
MANUFACTURER'S EQUIPMENT DELIVERY APPRAISED PRINCIPAL MATURITY
SERIAL NUMBER TYPE DATE(1) VALUE SERIES AMOUNT DATE
- -------------- --------------- -------- ----------- ---------- ----------- ----------------
<C> <S> <C> <C> <C> <C> <C>
55 Airbus A320-231 9/25/89 $29,841,667 A,B,C,D $23,178,000 January 2, 2006
65 Airbus A320-231 12/22/89 29,900,000 A,B,C,D 24,465,000 July 2, 2006
77 Airbus A320-231 12/22/89 30,162,500 A,B,C,D 24,465,000 July 2, 2006
82 Airbus A320-231 12/28/89 30,225,000 A,B,C,D 22,869,067 January 2, 2009
091 Airbus A320-231 9/28/90 30,350,833 A,B,C,D,E 27,654,646 January 2, 2009
092 Airbus A320-231 9/28/90 30,350,833 A,B,C,D,E 27,654,646 January 2, 2009
098 Airbus A320-231 9/28/90 30,605,000 A,B,C,D,E 27,654,646 January 2, 2009
099 Airbus A320-231 9/28/90 30,480,000 A,B,C,D,E 27,654,646 January 2, 2009
V0019 IAE V2500-A1 3/27/91 3,500,000 A,B,C,D,E 4,321,468 July 2, 2009
V0025 IAE V2500-A1 3/27/91 3,500,000 A,B,C,D,E 4,321,468 July 2, 2009
V0049 IAE V2500-A1 3/27/91 3,500,000 A,B,C,D,E 4,321,468 July 2, 2009
----------- -----------
$252,415,833 $218,560,054
=========== ===========
</TABLE>
- ---------------
* The principal amounts and maturity dates are indicative only and are subject
to change.
(1) The delivery date indicated is for the purpose of the Leases. The original
delivery dates of the Aircraft and Spare Engines from the manufacturer were
in 1989 and 1990. See "Description of the Equipment and the Appraisals".
The appraised value of each Aircraft and Spare Engine set forth above is
based upon the lesser of the average and median value of such Aircraft or Spare
Engine as appraised by the following three independent appraisal and consulting
firms as of the dates indicated: BK Associates, Inc. ("BK") as of July 2, 1996,
Aircraft Information Services, Inc. ("AISI") as of July 11, 1996 and Morten
Beyer and Associates ("MBA") as of July 12, 1996 (BK, AISI and MBA are
collectively referred to herein as the "Appraisers"). See "Description of the
Equipment and the Appraisals".
An appraisal is only an estimate of value and should not be relied upon as
a measure of realizable value. The proceeds realized upon a sale of any
Equipment may be less than the appraised value thereof. In addition, the value
of the Equipment in the event of the exercise of remedies under the applicable
Indenture will depend on market and economic conditions, the availability of
buyers, the condition of the Equipment, whether the Equipment is sold separately
or as a block and other factors. Accordingly, there can be no assurance that the
proceeds realized upon any such exercise with respect to the Equipment Notes and
the Equipment pursuant to the applicable Indenture would be as appraised or
sufficient to satisfy in full payments due on the Equipment Notes issued
thereunder or the Certificates.
For a discussion of the assumptions and methodologies used in preparing the
appraisals, see "Risk Factors -- Factors Relating to the Certificates and the
Offering -- Appraisals and Realizable Value of the Equipment" and "Description
of the Equipment and the Appraisals".
LOAN TO EQUIPMENT VALUE RATIOS
The following table sets forth the loan to Equipment value ratio ("LTV
Ratio") for each Class of Certificates as of the date of the consummation of the
offering of the Certificates and the Regular Distribution Dates specified
therein. The LTV Ratios for each Class of Certificates were obtained for each
such Regular Distribution Date by dividing (i) the expected Pool Balance of such
Class of Certificates together in each case with the expected Pool Balance of
all other Classes of Certificates senior in right of payment to such Class of
Certificates under the Intercreditor Agreement determined immediately after
giving effect to the distributions expected to be made on such Regular
Distribution Date, by (ii) the assumed value of all of the Equipment
8
<PAGE> 10
(the "Assumed Aggregate Equipment Value") on such Regular Distribution Date
based on the assumptions set forth below.
The table contains forward-looking information that is based on the
assumption that the value of each Aircraft and Spare Engine included in the
Assumed Aggregate Equipment Value as of November 26, 1996 depreciates by 2% per
year until the fifteenth year after the year of delivery of such Aircraft or
Spare Engine by the manufacturer, by 4% per year thereafter until the twentieth
year after the year of such delivery and by 6% per year thereafter. Other rates
or methods of depreciation would result in materially different LTV Ratios and
no assurance can be given (i) that the depreciation rates and methods assumed
for the purpose of the table are the ones most likely to occur or are
appropriate for evaluating the actual future value of any Aircraft or Spare
Engine or (ii) as to such actual future value. Many of the factors affecting the
value of the Equipment are discussed herein under "Risk Factors -- Factors
Relating to the Certificates and the Offering -- Appraisals and Realizable Value
of Equipment". Although the table is compiled on an aggregate basis, it should
be noted that, because the Equipment Notes are not cross-collateralized, the
excess proceeds realized from the disposition of any particular Aircraft or
Spare Engine would not be available to offset shortfalls on the Equipment Notes
relating to any other Aircraft or Spare Engine. Therefore, upon the occurrence
of an Indenture Event of Default, even if the Equipment as a group could be sold
for more than the total amounts payable in respect of all of the outstanding
Equipment Notes, if certain Equipment were sold for less than the total amount
payable in respect of the related Equipment Notes, there would not be sufficient
proceeds to pay all Classes of Certificates in full. See "Description of the
Equipment Notes -- Loan to Value Ratios of Equipment Notes" for additional
information regarding LTV Ratios for the Equipment Notes issued in respect of
each Aircraft or Spare Engine which may be more relevant in a default situation
than the aggregate values shown in the following table. Thus, the table should
not be considered a forecast or prediction of expected or likely LTV Ratios but
simply a mathematical calculation based on one set of assumptions.
<TABLE>
<CAPTION>
ASSUMED CLASS A
AGGREGATE CERTIFICATES CLASS A CLASS B CLASS B
EQUIPMENT POOL CERTIFICATES CERTIFICATES CERTIFICATES
DATE VALUE(1) BALANCE* LTV RATIO* POOL BALANCE* LTV RATIO*
- ---------------------------- ------------ ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
November 26, 1996........... $252,415,833 $100,661,333 39.9% $ 37,748,000 54.8%
July 2, 1997................ 247,367,517 98,384,387 39.8 36,961,540 54.7
July 2, 1998................ 242,319,200 96,455,161 39.8 36,238,080 54.8
July 2, 1999................ 237,270,883 94,525,934 39.8 35,420,120 54.8
July 2, 2000................ 232,222,567 92,596,708 39.9 33,990,873 54.5
July 2, 2001................ 227,174,250 90,360,808 39.8 29,139,166 52.6
July 2, 2002................ 222,125,933 86,298,667 38.9 22,244,726 50.7
July 2, 2003................ 217,077,617 79,422,793 36.6 20,536,792 54.6
July 2, 2004................ 212,029,300 68,772,320 32.4 18,843,257 53.4
July 2, 2005................ 204,578,400 57,788,323 28.2 5,335,086 43.6
July 2, 2006................ 126,154,600 40,982,562 32.5 783,225 46.7
July 2, 2007................ 119,654,133 23,466,947 19.6 783,225 46.6
July 2, 2008................ 113,153,667 3,905,736 3.5 0 0.0
July 2, 2009................ NA 0 0.0 0 0.0
</TABLE>
- ---------------
(1) The Assumed Aggregate Equipment Value as of November 26, 1996 (but not the
Assumed Aggregate Equipment Values for subsequent dates) was determined
based upon the lesser of the average and median value of all Equipment as
appraised by the Appraisers as of the respective dates of their appraisals
(see "Description of the Equipment and the Appraisals"). No assurance can be
given that such value represents the realizable value of the Equipment. See
"Risk Factors -- Factors Relating to the Certificates and the
Offering -- Appraisals and Realizable Value of the Equipment" and
"Description of the Equipment and the Appraisals".
9
<PAGE> 11
<TABLE>
<CAPTION>
CLASS C CLASS C CLASS D CLASS D CLASS E CLASS E
CERTIFICATE CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
DATE POOL BALANCE* LTV RATIO* POOL BALANCE* LTV RATIO* POOL BALANCE* LTV RATIO*(2)
- ---------------------- ------------- ---------- ------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 26, 1996..... $ 37,748,000 69.8% $ 29,249,875 81.4% $ 13,152,846 93.4%
July 2, 1997.......... 36,919,026 69.6 22,352,085 78.7 10,712,124 91.5
July 2, 1998.......... 34,366,255 68.9 17,336,519 79.0 4,526,550 86.4
July 2, 1999.......... 27,559,087 66.4 10,071,853 77.7 3,366,680 107.5
July 2, 2000.......... 20,306,029 64.7 2,159,643 71.5 2,291,853 98.7
July 2, 2001.......... 10,030,973 63.3 535,127 69.4 1,781,086 88.2
July 2, 2002.......... 1,328,231 54.4 0 0.0 1,751,019 76.1
July 2, 2003.......... 633,616 55.4 0 0.0 1,028,724 62.2
July 2, 2004.......... 0 0.0 0 0.0 803,569 52.5
July 2, 2005.......... 0 0.0 0 0.0 803,569 53.8
July 2, 2006.......... 0 0.0 0 0.0 0 0.0
July 2, 2007.......... 0 0.0 0 0.0 0 0.0
July 2, 2008.......... 0 0.0 0 0.0 0 0.0
July 2, 2009.......... 0 0.0 0 0.0 0 0.0
</TABLE>
- ---------------
(2) The LTV Ratio for the Class E Certificates is computed using the four
Aircraft and the three Spare Engines securing the Series E Equipment Notes.
* The information relating to periodic Pool Balances and resulting LTV Ratios
is indicative only and subject to change.
10
<PAGE> 12
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the offering of
the Certificates and certain cash flows.
LOGO
- ---------------
* Each Aircraft and Spare Engine is subject to a separate Lease and a related
Indenture.
** The Series E Equipment Notes will only be secured by four of the Aircraft
and the three Spare Engines.
*** Liquidity Facilities are only available with respect to the Class A, B and C
Certificates.
11
<PAGE> 13
THE OFFERING
Trusts:.................... Each of the Class A Trust, the Class B Trust, the
Class C Trust, the Class D Trust and the Class E
Trust is to be formed pursuant to one of the five
separate Pass Through Trust Agreements to be
entered into between America West and Fleet
National Bank, as trustee under each Trust. Each
Trust will be a separate entity.
Certificates Offered:...... The Certificates are pass through certificates to
be issued by each Trust, representing fractional
undivided interests in such Trust. The
Certificates to be issued by the Class A Trust,
the Class B Trust, the Class C Trust, the Class D
Trust and the Class E Trust are the Class A
Certificates, Class B Certificates, Class C
Certificates, Class D Certificates and Class E
Certificates, respectively.
Subordination Agent:....... Fleet National Bank, as subordination agent under
the Intercreditor Agreement (in such capacity,
the "Subordination Agent").
Initial Liquidity
Provider:.................. Kredietbank N.V., acting through its New York
branch, initially will provide three separate
liquidity facilities for the benefit of the
holders of the Class A Certificates, Class B
Certificates and Class C Certificates,
respectively.
Trust Property:............ The property of the Trusts (the "Trust Property")
will include (i) Equipment Notes to be issued on
a nonrecourse basis by the Owner Trustees in
connection with 11 separate leveraged lease
transactions to refinance the current
indebtedness of such Owner Trustees originally
incurred to finance the Aircraft and the Spare
Engines which will be leased by such Owner
Trustees to America West, together with all
monies at any time paid thereon and all monies
due and to become due thereunder, (ii) the rights
of such Trust under the Intercreditor Agreement
(including all monies receivable in respect of
such rights), (iii) except for the Class D and
Class E Trusts, all monies receivable under the
Liquidity Facility for such Trust and (iv) funds
from time to time deposited with the Trustee in
accounts relating to such Trust. The Equipment
Notes with respect to each Aircraft and Spare
Engine will be issued in up to five series under
separate Indentures (each, an "Indenture")
between the related Owner Trustee and the
indenture trustee thereunder (the "Indenture
Trustee"). Each Trust will purchase, pursuant to
certain Refunding Agreements (each, a "Refunding
Agreement"), one series of Equipment Notes issued
with respect to some or all of the Equipment such
that all of the Equipment Notes held in each
Trust will have an interest rate corresponding to
the interest rate applicable to the Certificates
to be issued by such Trust. The maturity dates of
the Equipment Notes acquired by each Trust will
occur on or before the final expected
distribution date (the "Final Expected
Distribution Date") applicable to the
Certificates to be issued by such Trust as set
forth on the cover page of this Prospectus. The
aggregate original principal amount of the
Equipment Notes to be held in each Trust will be
the same as the aggregate original face amount of
the Certificates to be issued by such Trust.
Certificates and
Denominations:........... The Certificates of each Trust will be issued in
denominations of $1,000 and integral multiples
thereof, except that one Certificate of each
12
<PAGE> 14
Trust may be issued in a different denomination.
See "Description of the Certificates -- General".
Regular Distribution
Dates:..................... January 2 and July 2, commencing January 2, 1997.
Special Distribution
Date:...................... Any business day on which a Special Payment is to
be distributed. See "Description of the
Certificates -- Payments and Distributions".
Record Date:............... The fifteenth day preceding a Regular Distribution
Date or a Special Distribution Date.
Distributions:............. All payments of principal and interest received by
the Trustee on the Equipment Notes held in each
Trust will be distributed by the Trustee to the
holders of the Certificates (the
"Certificateholders ") of such Trust, on the
Regular Distribution Dates, subject to the
provisions of the Intercreditor Agreement.
Assuming payments on the Equipment Notes are made
when due, the Final Expected Distribution Date
for each Class of Certificates will be as set
forth on the cover page of this Prospectus.
Payments on the Equipment Notes held in each
Trust are scheduled to be received in specified
amounts by the Trustee of such Trust on January 2
and July 2 of each year, commencing January 2,
1997. Payments of principal, Make-Whole Amount
(if any) and interest resulting from the purchase
(if any) of the Equipment Notes held in any Trust
will be distributed on a Special Distribution
Date after not less than ten days' notice from
the Trustee to the Certificateholders of such
Trust, subject to the provisions of the
Intercreditor Agreement. For a discussion of
distributions upon an Indenture Event of Default,
see "Description of the Certificates -- Indenture
Events of Default and Certain Rights Upon an
Indenture Event of Default".
Events of Default:......... Events of Default under each Pass Through Trust
Agreement (each, a "PTC Event of Default ") are
the failure to pay within ten business days of
the due date thereof: (i) the outstanding Pool
Balance of the applicable Class of Certificates
on the Final Legal Distribution Date (as defined
below) for such Class or (ii) interest due on
such Class of Certificates on any Regular
Distribution Date or Special Distribution Date
(each, a "Distribution Date") (unless, in the
case of the Class A, B or 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 Certificateholders
entitled thereto). The "Final Legal Distribution
Date" for each of the Class A, B, C, D and E
Certificates is January 2, 2011, July 2, 2009,
January 2, 2006, January 2, 2004 and January 2,
2008, respectively. Any failure to make expected
principal distributions on any Class of
Certificates on any Regular Distribution Date
(other than the Final Legal Distribution Date)
will not constitute a PTC Event of Default with
respect to such Certificates.
Purchase Rights of
Certificateholders:...... Upon the occurrence and during the continuation of
a Triggering Event (as defined below), (i) the
Class B Certificateholders shall have the right
to purchase all, but not less than all, of the
Class A Certificates, (ii) the Class C
Certificateholders shall have the right to
purchase all, but not less than all, of the Class
A and B Certificates, (iii) the Class D
Certificateholders shall have the right to
purchase all, but not less than all, of the Class
A, B and C Certificates and (iv) the Class E
13
<PAGE> 15
Certificateholders shall have the right to
purchase all, but not less than all, of the Class
A, B, C and D Certificates, in each case at a
purchase price equal to the Pool Balance of the
relevant Class or Classes of Certificates plus
accrued and unpaid interest thereon to the date
of purchase, without any Make-Whole Amount, but
including any other amounts due to the
Certificateholders of such Class or Classes.
"Triggering Event" means (x) the occurrence of an
Indenture Event of Default under all 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) certain
bankruptcy or insolvency events involving America
West.
Equipment Notes
(a) Interest:............ The Equipment Notes held in each Trust will accrue
interest at the applicable rate per annum for the
Certificates issued by such Trust as set forth on
the cover page of this Prospectus, payable on
January 2 and July 2 of each year, commencing
January 2, 1997, and such interest will be passed
through to Certificateholders of such Trust on
each such date until the Final Expected
Distribution Date for the Certificates issued by
such Trust, in each case subject to the
Intercreditor Agreement. Interest is calculated
on the basis of a 360-day year consisting of
twelve 30-day months. See "Description of the
Certificates -- Payments and Distributions",
"Description of the Equipment Notes -- General"
and "-- Principal and Interest Payments".
(b) Principal:........... Scheduled principal payments made on the Equipment
Notes held in each Trust will be passed through
to the Certificateholders of each such Trust on
January 2 or July 2 or both in certain years
commencing January 2, 1997, in accordance with
the principal repayment schedule set forth herein
under "Description of the Certificates -- Pool
Factors", in each case subject to the
Intercreditor Agreement.
(c) Redemption and
Purchase:........... (i) All of the Equipment Notes issued with
respect to an Aircraft or a Spare Engine will
be redeemed in whole upon the occurrence of
an Event of Loss with respect to such
Equipment if such Equipment is not replaced
by America West under the related Lease, in
each case at a price equal to the aggregate
unpaid principal amount thereof, together
with accrued interest thereon to, but not
including, the date of redemption, and all
other amounts payable under the related
Indenture or under the related Refunding
Agreement to the holders of such Equipment
Notes, but without any Make-Whole Amount.
(ii) If, with respect to an Aircraft or a Spare
Engine, (x) the Indenture Trustee with
respect to the related Equipment Notes has
taken action or notified the applicable Owner
Trustee that it intends to take action to
foreclose the lien of the related Indenture
or otherwise commence the exercise of any
significant remedy under such Indenture or
the related Lease, (y) the Equipment Notes
with respect to such Aircraft or Spare Engine
shall have been accelerated or (z) there
shall have occurred and be continuing a Lease
Event of Default, then in each case all of
the Equipment
14
<PAGE> 16
Notes issued with respect to such Aircraft or
Spare Engine may be purchased by the related
Owner Trustee or the beneficial owner of such
Equipment (the "Owner Participant"), at a price
equal to the aggregate unpaid principal amount
thereof, together with accrued and unpaid
interest thereon to, but not including, the
purchase date, and all other amounts then
payable under the related Indenture or under
the related Refunding Agreement to the holders
of such Equipment Notes, but without any
Make-Whole Amount (provided that if such option
is exercised at a time when a Lease Event of
Default shall have occurred and be continuing
for less than 120 days and the events described
in clauses (x) and (y) of this sentence do not
apply, such price shall include the Make-Whole
Amount).
(d) Security:............ The Equipment Notes issued with respect to each
Aircraft and Spare Engine will be secured by a
perfected security interest in the related Owner
Trustee's rights in and to such Aircraft or Spare
Engine and an assignment to the related Indenture
Trustee of certain of the related Owner Trustee's
rights under the related Lease, including the
right to receive payments of rent thereunder. The
Equipment Notes are not cross-collateralized and,
consequently, the Equipment Notes issued in
respect of any one Aircraft or Spare Engine are
not secured by any of the other Equipment or the
Leases related thereto. There are no cross-
default provisions in the Indentures or Leases
and, consequently, events resulting in an event
of default under any particular Indenture or
Lease may or may not result in an event of
default occurring under any other Indenture or
Lease. If the Equipment Notes issued in respect
of one or more Aircraft or Spare Engine are in
default and the Equipment Notes issued in respect
of the remaining Equipment are not in default, no
remedies will be exercisable under the Indentures
with respect to such remaining Equipment. See
"Description of the Equipment Notes -- Security",
"-- Indenture Events of Default; Notice and
Waiver" and "-- Remedies".
Although the Equipment Notes are not obligations
of, or guaranteed by, America West, the aggregate
amounts unconditionally payable by America West
for lease of the Equipment will be at least
sufficient to pay in full when due all scheduled
amounts required to be paid on the Equipment
Notes issued with respect to the Equipment. See
"Description of the Equipment Notes -- General".
(e) Section 1110
Protection:......... Milbank, Tweed, Hadley & McCloy, counsel to the
Underwriters, has advised the Indenture Trustees
that if America West were to become a debtor
under Chapter 11 of the Bankruptcy Code, the
applicable Owner Trustee, as a lessor under each
Lease, and the related Indenture Trustee, as
assignee of such Owner Trustee's rights under
such Lease pursuant to such related Indenture,
would be entitled to the benefits of Section 1110
of Title 11 of the United States Code (the
"Bankruptcy Code") with respect to the airframe
and engines comprising the related Aircraft or
with respect to the related Spare Engine. See
"Description of the Equipment Notes -- Remedies"
for a description of that opinion and certain
assumptions and qualifications contained therein.
(f) Ranking:............. Series B Equipment Notes issued in respect of the
Equipment will be subordinated in right of
payment to Series A Equipment Notes issued
15
<PAGE> 17
in respect of such Equipment; Series C Equipment
Notes issued in respect of such Equipment will be
subordinated in right of payment to Series A and
B Equipment Notes issued in respect of such
Equipment; Series D Equipment Notes issued in
respect of such Equipment will be subordinated in
right of payment to Series A, B and C Equipment
Notes issued in respect of such Equipment; and
Series E Equipment Notes issued in respect of
such Equipment will be subordinated in right of
payment to Series A, B, C and D Equipment Notes
issued in respect of such Equipment. On each
Distribution Date, (i) payments of interest and
principal due on Series A Equipment Notes issued
in respect of any Equipment will be made prior to
payments of interest and principal due on any
Series B, C, D and E Equipment Notes issued in
respect of such Equipment, (ii) payments of
interest and principal due on Series B Equipment
Notes will be made prior to payments of interest
and principal due on any Series C, D and E
Equipment Notes issued in respect of such
Equipment, (iii) payments of interest and
principal due on Series C Equipment Notes will be
made prior to payments of interest and principal
due on any Series D and E Equipment Notes issued
in respect of such Equipment and (iv) payments of
interest and principal due on Series D Equipment
Notes will be made prior to payments of interest
and principal due on any Series E Equipment Notes
issued in respect of such Equipment.
Liquidity Facilities:...... The Subordination Agent and the Liquidity Provider
will enter into a revolving credit agreement
(each, a "Liquidity Facility") with respect to
each Trust (other than the Class D and Class E
Trusts). Under each of the Liquidity Facilities,
the Liquidity Provider will, if necessary, make
advances ("Interest Drawings") in an aggregate
amount (the "Required Amount") sufficient to pay
interest on the Class A, B or C Certificates, as
the case may be, on up to three successive
Regular Distribution Dates (without regard to any
future payments of principal on such
Certificates) at the respective interest rates
(without any penalty or default margin) on such
Certificates (the "Stated Interest Rates"). The
initial amount available under the Liquidity
Facilities for the Class A Certificates, the
Class B Certificates and the Class C Certificates
will be $ , $ and $ ,
respectively. An Interest Drawing under the
relevant Liquidity Facility will be made promptly
after any Regular Distribution Date if, after
giving effect to the subordination provisions of
the Intercreditor Agreement, there are
insufficient funds available to the Subordination
Agent to pay interest on any Class A, B or C
Certificates; provided, however, that on any date
the maximum amount available under such Liquidity
Facility to fund any shortfall in interest due on
such Certificates will not exceed the Required
Amount. The Liquidity Facility for any Trust does
not provide for drawings thereunder to pay for
principal of, or Make-Whole Amount on, the
Certificates of such Trust, any interest on the
Certificates of such Trust in excess of the
Stated Interest Rates, or principal of, or
interest or Make-Whole Amount on, the
Certificates of any other Trust.
Upon each Interest Drawing under any Liquidity
Facility, the Subordination Agent will be
obligated to reimburse (to the extent that the
Subordination Agent has available funds therefor)
the Liquidity Provider for the amount of such
drawing. Such reimbursement
16
<PAGE> 18
obligation and any other amounts, including
interest thereon, owing to the Liquidity Provider
under each Liquidity Facility or certain other
agreements (the "Liquidity Obligations") will
rank pari passu with the Liquidity Obligations
relating to all other Liquidity Facilities and
will rank senior to the Certificates in right of
payment. Upon reimbursement in full of the
Interest Drawings (but not other Drawings),
together with any accrued interest thereon, under
any Liquidity Facility, the amount available
under such Liquidity Facility will be reinstated
to the then Required Amount of such Liquidity
Facility; provided that the amount will not be
reinstated at any time if (i) a Liquidity Event
of Default (as defined herein) shall have
occurred and be continuing or (ii) both(A) a
Triggering Event shall have occurred and be
continuing and (B) a Performing Note Deficiency
(as defined below) exist.
"Non-Performing Equipment Notes" are Equipment
Notes other than Performing Equipment Notes.
"Performing Equipment Notes" are Equipment Notes
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 as a debtor under Chapter 11 of the
Bankruptcy Code (i) any payment default existing
during the 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 the Section 1110 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.
If at any time the short-term unsecured debt rating
of the Liquidity Provider issued by Moody's
Investors Service, Inc. ("Moody's") or Standard &
Poor's Ratings Group ("Standard & Poor's" and,
together with Moody's, the "Rating Agencies") is
lower than the Threshold Rating (as defined
herein) or, in the event the Liquidity Provider's
short-term unsecured debt is not rated by Moody's
or Standard & Poor's, the long-term unsecured
debt rating of any Liquidity Provider issued by
either Moody's or Standard & Poor's is lower than
the Threshold Rating, then the Liquidity Provider
for the related Trust or the Subordination Agent
may arrange for another similar facility to be
provided by a financial institution having
unsecured short-term debt ratings or, in the
event a selected financial institution's
short-term unsecured debt is not rated by Moody's
or Standard & Poor's, long-term unsecured debt
ratings, issued by the applicable Rating Agencies
which are equal to or higher than the Threshold
Rating. If such Liquidity Facility is not
replaced within the period specified in the
17
<PAGE> 19
Intercreditor Agreement after notice of the
downgrading, such Liquidity Facility will be
drawn in full (the "Downgrade Drawing") and the
proceeds will be deposited into an account (a
"Cash Collateral Account") for such Trust and
used for the same purposes and under the same
circumstances and subject to the same conditions
as cash payments of Interest Drawings under such
Liquidity Facility would be used.
The Intercreditor Agreement provides that the
Subordination Agent shall hold the proceeds of a
Final Drawing made in accordance with the
provisions set forth under "Description of
Liquidity Facilities -- Liquidity Events of
Default" in the Cash Collateral Account for the
related Trust as cash collateral to be used for
the same purposes and under the same
circumstances, and subject to the same
conditions, as cash payments of Interest Drawings
under such Liquidity Facility would be used.
The Subordination Agent, in consultation with
America West (whose recommendations the
Subordination Agent will accept), may, subject to
certain limitations, arrange for a replacement
facility at any time to replace the Liquidity
Facility for any Trust. If such replacement
facility is provided at any time after a
Downgrade Drawing under such Liquidity Facility,
the funds on deposit in the Cash Collateral
Account for such Trust will be returned to the
Liquidity Provider being replaced.
Notwithstanding the subordination provisions of the
Intercreditor Agreement, the Liquidity Facility
for any Class of Certificates does not provide
for drawings thereunder to pay principal of or
interest or Make-Whole Amount on the Certificates
of any other Class. Therefore, only the holders
of the Certificates to be issued by a particular
Trust will be entitled to receive and retain the
proceeds of drawings under the Liquidity Facility
for such Trust. There is no Liquidity Facility
for the Class D and Class E Trusts. See
"Description of the Liquidity Facilities".
Intercreditor Agreement:
(a) Subordination:....... The Trusts, the Liquidity Provider and the
Subordination Agent will enter into an agreement
(the "Intercreditor Agreement") which will
provide as follows:
(i) All payments made in respect of the Equipment
Notes and certain other payments will be made
to the Subordination Agent which will
distribute such payments as described in
paragraphs (ii) and (iii) below.
(ii) On each Distribution Date, so long as no
Triggering Event shall have occurred (whether
or not continuing), all payments received by
the Subordination Agent in respect of the
Equipment Notes and certain other payments
will be distributed in the following order:
(a) payment of the Liquidity Obligations to
the Liquidity Provider and, if applicable, to
replenish Cash Collateral Accounts up to
their respective Required Amounts; (b)
payment of Expected Distributions (as defined
below) to the holders of Class A
Certificates; (c) payment of Expected
Distributions to the holders of Class B
Certificates; (d) payment of Expected
Distributions to the holders of Class C
Certificates; (e) payment of
18
<PAGE> 20
Expected Distributions to the holders of Class
D Certificates; (f) payment of Expected
Distributions to the holders of the Class E
Certificates; and (g) payment of certain fees
and expenses of the Subordination Agent and
each Trustee.
"Expected Distributions" means, with respect to the
Certificates of any Trust on any Distribution
Date (the "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, upon redemption,
prepayment, purchase or acceleration or
otherwise) and such payments have been
distributed to the holders of such Certificates.
(iii) Upon the occurrence of a Triggering Event and
at all times thereafter, all payments
received by the Subordination Agent in
respect of the Equipment Notes and certain
other payments will be distributed in the
following order: (a) to reimburse the
Subordination Agent, each Trustee, the
Liquidity Provider and any Certificateholder,
as the case may be, for the payment of
Administration Expenses (as defined herein);
(b) to the Liquidity Provider in payment of
Liquidity Obligations and, so long as no
Performing Note Deficiency exists and no
Liquidity Event of Default has occurred and
is continuing, to replenish Cash Collateral
Accounts up to their respective Required
Amounts; (c) to reimburse the Subordination
Agent, each Trustee and each
Certificateholder, as the case may be, for
the payment of Certain Taxes and Fees (as
defined herein); (d) to pay Adjusted Expected
Distributions to the holders of Class A
Certificates; (e) to pay Adjusted Expected
Distributions to the holders of Class B
Certificates; (f) to pay Adjusted Expected
Distributions to the holders of Class C
Certificates; (g) to pay Adjusted Expected
Distributions to the holders of Class D
Certificates; and (h) to pay Adjusted
Expected Distributions to the holders of
Class E Certificates.
"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 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
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<PAGE> 21
(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 (as defined below), clause (B) above
shall not be applicable.
"Aggregate LTV Collateral Amount" means, for any
Class of Certificates for any Distribution Date,
the sum of the applicable LTV Collateral Amounts
(as defined below) 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.
"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 (as defined below) of such Aircraft or
Spare Engine. After a Triggering Event occurs and
any Equipment Note becomes a Non-Performing
Equipment Note, the Subordination Agent will be
required to obtain LTV Appraisals to determine
the Appraised Current Market Value 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 Equipment).
"LTV Appraisal" means a current fair market value
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 for any
Distribution Date means the lesser of (i) the
initial 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" initially means for the Class A
Certificates 39.9%, for the Class B Certificates
54.8%, for the Class C Certificates 69.8%, for
the Class D Certificates 81.4% and for the Class
E Certificates 93.4%.
(b) Intercreditor
Rights:.............. Pursuant to the Intercreditor Agreement, the
Trustees and the Liquidity Provider shall agree
that, with respect to any Indenture at any given
time, the relevant Indenture Trustee will be
directed (a) in taking, or refraining from
taking, any action thereunder, so long as no
Indenture Event of Default shall have occurred
and be continuing thereunder, by the holders of
at least a majority of the outstanding principal
amount of the Equipment Notes issued thereunder
(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 (a) in accordance with the
directions of the Trustees representing holders
of Certificates representing an undivided
interest in such
20
<PAGE> 22
principal amount of Equipment Notes) and (b)
after the occurrence and during the continuance
of an Indenture Event of Default thereunder,
subject to certain conditions in exercising
remedies thereunder (including acceleration of
such Equipment Notes or foreclosing the lien on
the Equipment securing such Equipment Notes), by
the Controlling Party.
"Controlling Party" with respect to any Indenture
means: (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. See
"Description of the Certificates -- Indenture
Events of Default and Certain Rights Upon an
Indenture Event of Default" for a description of
the rights of the Certificateholders of each
Trust to direct the respective Trustee.
Notwithstanding the foregoing, subject to certain
limitations, the Liquidity Provider shall have
the right to elect to become the Controlling
Party with respect to an Indenture at any time
from and including the date which is 18 months
after the earlier of (i) the acceleration of the
Equipment Notes issued thereunder and (ii) a
Final Drawing (as defined herein) under the
Liquidity Facilities, if at the time of such
election the Liquidity Obligations have not been
paid in full; provided that if there is more than
one Liquidity Provider, the Liquidity Provider
with the greatest amount of unreimbursed
Liquidity Obligations shall have such right.
"Final Distributions" means, with respect to the
Certificates of any Trust on any Distribution
Date, the sum of (x) the aggregate amount of all
accrued and unpaid interest on such Certificates
and (y) the Pool Balance of such Certificates as
of the immediately preceding Distribution Date.
(i) Upon the occurrence and during the
continuation of any Indenture Event of
Default under any Indenture, the Controlling
Party may accelerate and sell all (but not
less than all) of the Equipment Notes issued
under such Indenture to any person, subject
to the provisions of paragraph (ii) below.
The proceeds of such sale will be distributed
pursuant to the provisions of the
Intercreditor Agreement.
(ii) So long as any Certificates are outstanding,
during nine months after the earlier of (x)
the acceleration of the Equipment Notes under
any Indenture or (y) the bankruptcy or
insolvency of America West, without the
consent of each Trustee, (a) no Equipment
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 Equipment or
such Equipment Notes, and (b) the amount and
payment dates of rentals payable by America
West under the Lease for such Equipment 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
21
<PAGE> 23
adjustment, in each case, using the weighted
average interest rate of the Equipment Notes
then outstanding under such Indenture as the
discount rate.
"Minimum Sale Price" means, with respect to the
Equipment or the Equipment Notes issued in
respect of such Equipment, at any time, the
lesser of (a) 75% of the Appraised Current Market
Value of such Equipment based on the most recent
LTV Appraisal and (b) the aggregate outstanding
principal amount of such Equipment Notes, plus
accrued and unpaid interest thereon.
Use of Proceeds:........... The proceeds from the sale of the Certificates
offered hereby will be used to purchase the
Equipment Notes issued by the related Owner
Trustees in connection with the refinancing of
the indebtedness previously incurred by the Owner
Trustees to finance the purchase of the
Equipment. The proceeds from the sale of
Equipment Notes will be used to repay all of the
current indebtedness of the Owner Trustees with
respect to the Equipment, and any proceeds
remaining after such repayment may be used to pay
certain costs and expenses, such as break-funding
costs and redemption premiums, incurred in the
refinancing. Such Equipment Notes will represent
in the aggregate the entire debt portion of the
leveraged lease transactions relating to all of
the Equipment. America West will not receive any
of the proceeds from the sale of the
Certificates. See "Use of Proceeds".
Trustee:................... Fleet National Bank will act as Trustee and as
paying agent and registrar for the Certificates
of each Trust. Fleet National Bank will also act
as Subordination Agent under the Intercreditor
Agreement. The Chase Manhattan Bank will act as
Indenture Trustee with respect to the issue of
Equipment Notes relating to four of the Aircraft,
and Fleet National Bank will act as Indenture
Trustee with respect to the issue of Equipment
Notes relating to four of the Aircraft and the
three Spare Engines.
Federal Income Tax
Consequences:............ Each Trust will be classified as a grantor trust
for federal income tax purposes, and therefore
each Certificate Owner will be treated as the
owner of a pro rata undivided interest in each of
the Equipment Notes and any other property held
by such Trust. Each Certificate Owner should
report on its federal income tax return its pro
rata share of income from such Equipment Notes
and other property held by such Trust in
accordance with such Certificate Owner's method
of accounting. The Equipment Notes will not be
issued with original issue discount for U.S.
federal income tax purposes. See "Certain U.S.
Federal Income Tax Consequences".
ERISA Considerations:...... In general, employee benefit plans subject to Title
I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended
(the "Code"), or entities which may be deemed to
hold the assets of any such plan (collectively,
"Plans"), will be eligible to purchase the Class
A Certificates. Plans will not be eligible to
purchase the Class B, C, D or E Certificates;
provided, however, that such Certificates may be
acquired with the assets of an insurance company
general account that may be deemed to contain
Plan assets if the conditions of Prohibited
Transaction Class Exemption ("PTCE") 95-60, 60
Fed. Reg. 35,925, are satisfied. By the
acceptance of a Class B, C, D or E Certificate,
each Certificateholder will be deemed to have
represented
22
<PAGE> 24
that either (i) no Plan assets have been used to
purchase such Certificate or (ii) the purchase
and holding of such Certificate is exempt from
the prohibited transaction restrictions of ERISA
and the Code pursuant to PTCE 95-60. Each Plan
fiduciary (and each fiduciary for a governmental
or church plan subject to rules similar to those
imposed on Plans under ERISA) should consult with
its legal advisor concerning an investment in any
of the Certificates. See "ERISA Considerations".
Rating of the
Certificates:.............. It is a condition to the issuance of the
Certificates that the Certificates be rated by
Moody's and Standard & Poor's as set forth below:
<TABLE>
<CAPTION>
STANDARD &
CERTIFICATES MOODY'S POOR'S
------------ ------- ----------
<S> <C> <C>
Class A A2 AA-
Class B Baa2 A-
Class C Ba1 BBB-
Class D Ba3 BB
Class E B1 B+
</TABLE>
A rating is not a recommendation to purchase, hold
or sell Certificates, inasmuch as such rating
does not address market price or suitability for
a particular investor. There can be no assurance
that such ratings will not be lowered or
withdrawn by a Rating Agency if, in the opinion
of such Rating Agency, circumstances (including
the downgrading of America West or the Liquidity
Provider) so warrant. See "Risk Factors --
Factors Relating to the Certificates and the
Offering -- Ratings of the Certificates".
Rating of the Initial
Liquidity Provider:........ Kredietbank N.V., acting through its New York
branch, as the Initial Liquidity Provider, has a
short-term unsecured debt rating of P-1 and A1+
from Moody's and Standard & Poor's, respectively,
and a long-term unsecured debt rating of Aa2 and
AA- from Moody's and Standard & Poor's,
respectively.
Threshold Rating:.......... "Threshold Rating" means the short-term unsecured
debt rating of P-1 by Moody's and A-1 by Standard
& Poor's or, 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 of A2 by Moody's and AA- by Standard &
Poor's.
23
<PAGE> 25
SUMMARY FINANCIAL AND OPERATING DATA
The following table summarizes certain financial and operating data with
respect to the Company contained elsewhere in this Prospectus and should be read
in conjunction therewith. Statements of operations data subsequent to August 25,
1994 and balance sheet data as of December 31, 1994 and 1995 and September 30,
1995 and 1996 reflect the adoption by the Company of fresh start reporting upon
consummation of the Company's reorganization and are not prepared on a basis of
accounting consistent with prior data. References to "Predecessor Company" refer
to the Company's operations prior to its emergence from bankruptcy and
references to "Reorganized Company" refer to the Company's operations after its
emergence from bankruptcy. See the financial statements and related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations".
<TABLE>
<CAPTION>
REORGANIZED COMPANY PREDECESSOR COMPANY(1)
----------------------------------------------------------- ---------------------------
NINE MONTHS NINE MONTHS PERIOD FROM PERIOD FROM
ENDED ENDED YEAR ENDED AUGUST 26 TO JANUARY 1 TO YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, AUGUST 25, DECEMBER 31,
1996 1995 1995(2) 1994 1994 1993
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)
STATEMENTS OF OPERATIONS DATA:
Operating revenues............... $1,299,617 $1,154,333 $1,550,642 $ 469,766 $ 939,028 $1,325,364
Operating income................. 43,258(3) 132,012 154,732 38,871 107,506 121,054
Income (loss) before income taxes
and extraordinary items........ 17,690 95,278 108,378 19,736 (201,209) 37,924
Income (loss) before
extraordinary items............ (2,458) 48,782 54,770 7,846 (203,268) 37,165
Extraordinary items(4)........... (1,105) (984) (984) -- 257,660 --
Net income (loss)................ (3,563) 47,798 53,786 7,846 54,392 37,165
Earnings (loss) per share(5):
Primary........................ (0.08) 1.04 1.16 .17 1.99 1.50
Fully diluted.................. (0.08) 1.03 1.15 .17 1.41 1.04
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital deficiency....... $(136,467) $ (77,306) $ (70,416) $ (47,927) $ (163,572) $ (124,375)
Total assets..................... 1,539,389 1,642,831 1,588,709 1,545,092 1,053,780 1,016,743
Long-term debt, less current
maturities(6).................. 336,235 376,655 373,964 465,598 597,839 620,992
Total stockholders' equity
(deficiency)................... 609,495 643,488 649,472 595,446 (286,395) (254,262)
OPERATING DATA:
Available seat miles (in
millions)...................... 15,863 14,503 19,421 6,424 11,636 17,190
Revenue passenger miles (in
millions)...................... 11,341 10,035 13,313 3,972 8,261 11,221
Passenger load factor (%)........ 71.5 69.2 68.5 61.8 71.0 65.3
Yield per revenue passenger mile
(cents)........................ 10.81 10.79 10.91 11.02 10.68 11.11
Passenger revenue per available
seat mile (cents).............. 7.73 7.47 7.48 6.81 7.58 7.25
Operating cost per available seat
mile (cents)................... 7.92(3) 7.05 7.19(7) 6.71 7.15 7.01
Full time equivalent employees
(at end of period)............. 9,208 9,786 8,712 10,715 10,849 10,544
</TABLE>
- ---------------
(1) Includes net expenses incurred by the Predecessor Company in connection with
its reorganization of $273.7 million for the period January 1 to August 25,
1994 and $25.0 million for the year ended December 31, 1993.
(2) Costs associated with the Company's outsourcing of its heavy aircraft
maintenance resulted in a pretax restructuring charge of approximately $10.5
million.
(3) Reflects a $65.1 million nonrecurring special charge related to the
Company's renegotiation of its AVSA aircraft purchase agreement and
writedown of certain aircraft related inventory and equipment and
underutilized facilities as well as certain other adjustments.
(4) Includes (i) an extraordinary loss of $1.1 million in the nine months ended
September 30, 1996 relating to prepayment of indebtedness, (ii) an
extraordinary loss of $984,000 in the nine months ended September 30, 1995
and the year ended December 31, 1995 resulting from the exchange of debt by
the Company and (iii) an extraordinary gain of $257.7 million in the period
from January 1 to August 25, 1994 resulting from the discharge of
indebtedness pursuant to the consummation of the Company's plan of
reorganization.
(5) Historical per share data for the Predecessor Company are not meaningful
since the Company has been recapitalized and has adopted fresh start
reporting as of August 25, 1994.
(6) Includes certain balances reported as "Estimated Liabilities Subject to
Chapter 11 Proceedings" for the Predecessor Company.
(7) Restructuring costs associated with the Company's outsourcing of its heavy
aircraft maintenance resulted in an increase in cost per available seat mile
of .05 cents for the year ended December 31, 1995.
24
<PAGE> 26
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE CERTIFICATES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND SHOULD PARTICULARLY
CONSIDER THE FOLLOWING MATTERS:
COMPANY RELATED RISKS
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This Prospectus contains various forward-looking statements and information
that are based on management's beliefs as well as assumptions made by and
information currently available to management. When used in this document, the
words "anticipate", "estimate", "project", "expect" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Among the key factors that may have a direct bearing on America
West's results are competitive practices in the airline industry generally and
particularly in the Company's principal markets, the ability of the Company to
meet existing financial obligations in the event of adverse industry or economic
conditions or to obtain additional capital to fund future commitments and
expansion, the Company's relationship with employees and the terms of future
collective bargaining agreements and the impact of current and future laws and
governmental regulations affecting the airline industry and the Company's
operations.
LEVERAGE; FUTURE CAPITAL REQUIREMENTS
At September 30, 1996, the Company had $382.4 million of long-term
indebtedness (including current maturities). America West does not have
available lines of credit or significant unencumbered assets. The Company may be
less able than certain of its competitors to withstand adverse industry
conditions or a prolonged economic recession. In addition, at September 30,
1996, the Company had commitments for a total of 22 Airbus A320-200 aircraft for
delivery beginning in 1999. The aggregate net cost of such aircraft is based on
formulae that include certain price indices (including indices for various
aircraft components such as metal products) for periods preceding the various
delivery dates. Based on an assumed 5% annual price escalation, the Company
estimates such aggregate net cost to be approximately $1.2 billion. The Company
has arranged for financing for up to one-half of the commitment relating to such
aircraft and will require substantial capital from external sources to meet its
remaining financial commitment. There can be no assurance that the Company will
be able to obtain such capital in sufficient amounts or on acceptable terms. If
the Company restructures the Company's arrangements with AVSA, the AVSA Term
Sheet provides among other things, that the number of aircraft ordered by the
Company would be increased from 22 to 34 and the orders subject to cancellation
would be increased from five to 12. Also, the AVSA Term Sheet provides for an
improvement from the Company's perspective in the financing terms and conditions
under which aircraft would be purchased, and that AVSA and the manufacturers of
the engines for the aircraft would agree to provide back-stop financing for 16
of the 22 firm orders. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Developments" and "-- Liquidity
and Capital Resources". In addition, pursuant to the Company's growth plan, the
Company is expanding its fleet, increasing frequencies to existing cities and
adding destinations to its route system. See "Business -- Operations". This
expansion will require the lease of additional aircraft. There can be no
assurance that the Company will be able to negotiate such leasing arrangements
in sufficient amounts or on acceptable terms.
PRIOR REORGANIZATION
The Company experienced significant operating losses in each year of the
three-year period ended December 31, 1992. During this period, notwithstanding a
series of actions taken by the Company to improve its cash position and reduce
costs, the Company faced a severe liquidity crisis and filed for protection
under Chapter 11 of the Bankruptcy Code in June 1991. In connection with its
reorganization in bankruptcy and related operational restructuring (the
"Reorganization"), the Company took significant steps to improve its operations,
leading to profitability during 1993 and subsequent periods. The Company's
long-term viability, however, will depend upon its ability to sustain profitable
results of operations. There can be no assurance that
25
<PAGE> 27
such results can or will be sustained. In connection with the Reorganization,
the Company adopted fresh start reporting. Certain fresh start adjustments have
had a significant effect on the Company's statements of operations subsequent to
the Reorganization, which statements are not prepared on a basis consistent with
the prior periods. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations". At September 30, 1996, approximately
398,000 shares of the Company's Class B Common Stock (the "Class B Common
Stock") remained with an escrow agent pending final resolution of claims in
connection with the bankruptcy. All other securities issued pursuant to the
bankruptcy have been distributed.
LABOR NEGOTIATIONS
In October 1993, the Air Line Pilots Association ("ALPA") was certified by
the National Mediation Board (the "NMB") as the bargaining representative of the
Company's pilots. In May 1995, a five-year collective bargaining agreement with
the Company's pilots became effective. In September 1994, the Company's flight
attendants voted in favor of AFA representation and contract negotiations are
ongoing. In January 1996, the International Brotherhood of Teamsters ("IBT")
filed an application with the NMB seeking to be certified as the bargaining
representative for the Company's mechanics, including related personnel. After a
representation election, the NMB confirmed the IBT as the bargaining
representative of the mechanics. The Company is presently contesting that
confirmation. In April 1996, the IBT filed an application with the NMB seeking
to become the collective bargaining representative of the Company's 40 stock
clerks, which was rejected at an election in July 1996. Following the
announcement of those election results, the IBT filed with the NMB a claim of
election interference against the Company. If the NMB rules in favor of IBT, a
rerun election will be ordered.
In September 1996, the Transportation Workers Union filed an application
with the NMB seeking to become the collective bargaining representative of the
Company's approximately 40 dispatchers. The NMB has scheduled a representation
election to occur during late October and November 1996.
There have been numerous attempts by unions to organize the employees of
the Company, and the Company expects such organization efforts to continue in
the future. The Company cannot predict the terms of any future collective
bargaining agreement and therefore the effect, if any, on the Company's
operations or financial condition. See "Business -- Labor Relations".
CONCENTRATION OF VOTING POWER, INFLUENCE OF CERTAIN PRINCIPAL STOCKHOLDERS
At October 31, 1996, TPG Partners, L.P. ("TPG ") (together with its
affiliates TPG Parallel I, L.P. ("TPG Parallel ") and Air Partners II, L.P.
("Air Partners II ")), Continental and Mesa owned in the aggregate 4,373,395
shares of the outstanding Class B Common Stock (assuming the exercise of all
warrants to purchase Class B Common Stock (the "Warrants") held by such persons)
and 100% of the Company's Class A Common Stock (the "Class A Common Stock" and
together with the Class B Common Stock, the "Common Stock"), and thereby
controlled approximately 60.4% of the total voting power of America West. As a
result, TPG, TPG Parallel, Air Partners II, Continental and Mesa, whose shares
are subject to the terms of a Stockholders' Agreement (defined herein), are able
to elect a majority of their designees to the Board of Directors and otherwise
to control the Company by, among other things, taking or approving actions to
(i) amend the America West charter or effect a merger, sale of assets or other
major corporate transaction; (ii) defeat any takeover attempt; (iii) determine
the amount of dividends, if any, paid to themselves and the other holders of
Common Stock, and (iv) control the outcome of virtually all matters submitted
for a vote of the stockholders of the Company, subject to certain restrictions.
Mesa and Continental are engaged in the airline industry and, are parties to
alliance agreements with the Company. The general partner of each of TPG, TPG
Parallel and Air Partners II is a limited partnership whose general partner is
TPG Advisors, Inc., a Delaware corporation. The executive officers and directors
of TPG Advisors, Inc. are David Bonderman, James G. Coulter, William Price,
James O'Brien, Richard P. Schifter and Richard Ekleberry. Mr. Bonderman, Mr.
Coulter and Mr. Price, through their positions in Air Partners, L.P., a
partnership formed to participate in the funding of the reorganization of
Continental and a significant shareholder of Continental, may be deemed to own
beneficially a significant percentage of Continental's common stock. Mr.
Bonderman and Mr. Price are directors of Continental. Larry L. Risley, a
director of the Company, is the chairman and chief executive officer of Mesa. As
a result, there can be no assurance that the interests of
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<PAGE> 28
Continental, Mesa, TPG, TPG Parallel and Air Partners II will not differ from
the interests of the Company or that any such party will not seek to influence
the Company in a manner that serves its interests.
Pursuant to the terms of an agreement among the Company, AmWest Partners,
L.P., GPA and certain designated stockholder representatives (the "Stockholders'
Agreement"), AmWest Partners, L.P. ("AmWest "), a limited partnership in which
TPG, TPG Parallel, Air Partners II, Continental and Mesa participated, agreed to
certain limitations on its ability to control the Company, including, that for a
three-year period beginning on August 25, 1994 (the "Effective Date"), the
Company shall have a Board of Directors of up to 15 members, six members of
which may be designated by parties other than AmWest or its partners (including
three Creditors' Committee Directors, one Equity Committee Director, one
Independent Company Director and one GPA Director, as such terms are defined in
the Stockholders' Agreement). As of May 1996, GPA Group plc ("GPA") is no longer
entitled to designate a director. In addition, the Stockholders' Agreement
provides that until the first annual meeting after August 25, 1997, the approval
of certain transactions in which AmWest or its affiliates may participate will
require the affirmative vote of the holders of a majority of the voting power of
the outstanding shares of each class of common stock of the Company entitled to
vote, voting as a single class and excluding any shares owned by AmWest or any
of its affiliates (other than Mesa). Transactions to which such restriction
applies include any merger or consolidation of the Company with or into AmWest
or any of its affiliates, any sale or other disposition of all or a substantial
part of the assets of the Company to AmWest or any of its affiliates and certain
other transactions with or involving the Company in which AmWest or any of its
affiliates would acquire an increased percentage ownership of voting equity
securities in the Company. The shareholder voting requirements specified above
will not apply to a proposed action approved or recommended by (i) the Board of
Directors and (ii) at least three Independent Directors (as such term is defined
in the Stockholders' Agreement), unless otherwise required by applicable law.
Upon the dissolution of AmWest on the Effective Date, the provisions of the
Stockholders' Agreement with respect to AmWest became binding upon TPG, TPG
Parallel, Air Partners II, Continental and Mesa.
Since 1990, America West, GPA and certain of its subsidiaries have engaged
in a variety of transactions in addition to its leasing of the Aircraft as
described herein. See "Certain Transactions".
INDUSTRY RELATED RISKS
COMPETITIVE INDUSTRY CONDITIONS
The airline industry is highly competitive and industry earnings are
volatile. From 1990 to 1992, the airline industry experienced unprecedented
losses due to high fuel costs, general economic conditions, intense price
competition and other factors. Airlines compete on the basis of pricing,
scheduling (frequency and flight times), on-time performance, frequent flyer
programs and other services. The airline industry is susceptible to price
discounting, which involves the offering of discount or promotional fares to
passengers. Any such fares offered by one airline are normally matched by
competing airlines, which may result in lower industry yields without a
corresponding increase in traffic levels.
Most of the Company's markets are highly competitive and are served by
larger carriers with substantially greater financial resources than the Company.
Also, in recent years several new carriers have entered the industry, typically
with low cost structures. In some cases, new entrants have initiated or
triggered further price discounting. The entry of additional new carriers on
many of the Company's routes, as well as increased competition from or the
introduction of new services by established carriers, could negatively impact
America West's results of operations.
In addition, the introduction of broadly available, deeply discounted fares
by a U.S. airline would result in lower yields for the entire industry and could
have a material adverse effect on America West's operating results.
AIRCRAFT FUEL
Fuel costs constituted approximately 13.2% of America West's total
operating expenses during the nine months ended September 30, 1996. A one cent
per gallon change in fuel price would affect the Company's
27
<PAGE> 29
annual operating results by approximately $3.4 million at consumption levels of
the first three quarters of 1996. Accordingly, either a substantial increase in
fuel prices or the lack of adequate fuel supplies in the future would be likely
to have a material adverse effect on the operating results of the Company. Fuel
price increases or supply shortages can occur at any time as a result of, among
other things, geopolitical developments. The Company purchases fuel on standard
trade terms under master agreements. The Company does not currently hedge its
fuel costs but the Company's board of directors has recently approved a fuel
hedging plan and the Company may elect to implement it in the future.
FAA FUNDING
The National Aviation Civilian Review Commission, with the assistance of
the Department of Transportation (the "DOT"), will conduct an independent study
of funding requirements for the Federal Aviation Administration (the "FAA") and
develop a cost allocation model for distribution of the cost of using the United
States aviation system to each segment of the system. The Review Commission will
also analyze funding alternatives to the existing federal air transportation
excise taxes (the 10% domestic ticket tax, the 6.25% air cargo tax and the $6.00
international departure tax) which currently fund the FAA and which are
scheduled to expire December 31, 1996. The Company cannot forecast the results
of the Review Commission's activities or what proposals the Review Commission
will make. Implementation of these proposals could significantly increase the
cost of airline operations and could have a material adverse effect on the
Company's operating results. See "Business -- Government Regulations -- FAA
Funding".
SECURITY AND SAFETY MEASURES
The President's Commission on Aviation Safety and Security and the U.S.
Congress recently adopted increased safety and security measures designed to
increase airline passenger security and protect against terrorist acts which
have resulted in additional operating costs to the airline industry. Future
decisions which place increased security and safety requirements on the airline
industry could be significant. The Company cannot forecast what additional
security and safety requirements may be imposed in the future or the costs or
revenue impact that would be associated with complying with such requirements.
See "Business -- Government Regulations -- Security and Safety Measures".
OTHER REGULATORY MATTERS
In the last several years, the FAA has issued a number of maintenance
directives and other regulations relating to, among other things, retirement of
older aircraft, collision avoidance systems, airborne windshear avoidance
systems, noise abatement and increased inspections and maintenance procedures to
be conducted on older aircraft. At September 30, 1996, the Company's fleet
consisted of 99 aircraft of which 21 aircraft meet the FAA's Stage II (but not
Stage III) noise reduction requirements and must be retired or significantly
modified prior to the year 2000. These modifications may require substantial
capital expenditures. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources".
Management is currently considering its options regarding such aircraft.
The FAA is currently revising procedures for airline surveillance of
outsourced maintenance and training. Additional laws and regulations have been
proposed from time to time that could significantly increase the cost of airline
operations by imposing additional requirements or restrictions on operations.
Laws and regulations have also been considered from time to time that would
prohibit, restrict or tax the ownership of airline routes or takeoff and landing
slots. Also, the award of international route authority to U.S. carriers (and
the retention of such authority) is regulated by the DOT and such authority may
be affected by treaties and related agreements between the United States and
foreign governments which are amended from time to time. America West cannot
predict what laws and regulations will be adopted or what changes to
international air transportation agreements will be effected, if any, or how
they will affect America West. See "Business -- Government Regulations."
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<PAGE> 30
FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
APPRAISALS AND REALIZABLE VALUE OF THE EQUIPMENT
The appraised value of each Aircraft and Spare Engine is based upon the
lesser of the average and median value of such Aircraft or Spare Engine as
appraised by the Appraisers (the "Appraisals"). The Appraisals are based on
differing assumptions and methodologies, which vary among the Appraisers. For a
discussion of the assumptions and methodologies used in preparing each of the
Appraisals, reference is hereby made to the Appraiser's reports with respect to
the Appraisals, copies of which are annexed to this Prospectus as Appendix II.
Appraisals that are prepared based on different assumptions or methodologies may
result in valuations that are significantly different from those contained in
the Appraisals. The appraised value presented in this Prospectus for each of the
Spare Engines (which is based upon the lesser of the average and median
appraisal values provided by the Appraisers) indicates a value for each such
Spare Engine that is less than the aggregate principal amount of the Equipment
Notes to be issued (the "Notes Amount") in respect of such Spare Engine. Two of
the Appraisers appraised each of the Spare Engines at a value lower than the
corresponding Notes Amount, while one Appraiser appraised each of the Spare
Engines at a value greater than the corresponding Notes Amount.
An appraisal is only an estimate of value and should not be relied upon as
a measure of realizable value. The proceeds realized upon the sale of any
Equipment may be less than the appraised value thereof. In addition, the value
of the Equipment in the event of the exercise of remedies under the applicable
Indenture will depend on market and economic conditions at the time, the
availability of buyers, the condition of the Equipment, whether the Equipment is
sold separately or as a block and other factors. Accordingly, there can be no
assurance that the proceeds realized upon any such exercise with respect to the
Equipment Notes and the Equipment pursuant to the applicable Indenture would be
as appraised or sufficient to satisfy in full remaining payments due on the
Equipment Notes issued thereunder or the Certificates. See "Description of the
Equipment and the Appraisals -- Appraised Value".
The Equipment Notes are not cross-collateralized and, consequently,
liquidation proceeds from the sale of the Equipment in excess of the amounts due
on Equipment Notes related to such Equipment will not be available to cover
losses, if any, on any other Equipment Notes.
PRIORITY OF DISTRIBUTIONS; SUBORDINATION
Pursuant to the Intercreditor Agreement to which the Trusts, the
Subordination Agent and the Liquidity Provider will be parties, on each
Distribution Date, so long as no Triggering Event shall have occurred (whether
or not continuing), all payments received by the Subordination Agent will be
distributed in the following order: (a) payment of the Liquidity Obligations to
the Liquidity Provider and, if applicable, to replenish the Cash Collateral
Accounts up to their respective Required Amounts; (b) payment of Expected
Distributions to the holders of Class A Certificates; (c) payment of Expected
Distributions to the holders of Class B Certificates; (d) payment of Expected
Distributions to the holders of Class C Certificates; (e) payment of Expected
Distributions to the holders of Class D Certificates; (f) payment of Expected
Distributions to the holders of Class E Certificates; and (g) payment of certain
fees and expenses of the Subordination Agent and each Trustee.
In addition, upon the occurrence of a Triggering Event and at all times
thereafter, all payments received by the Subordination Agent in respect of the
Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (a) to reimburse the
Subordination Agent, each Trustee, the Liquidity Provider and any
Certificateholder, as the case may be, for the payment of Administration
Expenses; (b) to the Liquidity Provider in payment of Liquidity Obligations and,
so long as no Performing Note Deficiency Exists and no Liquidity Event of
Default has occurred and is continuing to replenish Cash Collateral Accounts up
to their respective Required Amounts; (c) to reimburse the Subordination Agent,
each Trustee and each Certificateholder, as the case may be, for payment of
Certain Taxes and Fees; (d) to pay Adjusted Expected Distributions to the
holders of Class A Certificates; (e) to pay Adjusted Expected Distributions to
the holders of Class B Certificates; (f) to pay Adjusted Expected
29
<PAGE> 31
Distributions to the holders of Class C Certificates; (g) to pay Adjusted
Expected Distributions to the holders of Class D Certificates; and (h) to pay
Adjusted Expected Distributions to the holders of Class E Certificates.
The priority of distributions after a Triggering Event will have the effect
in certain circumstances of distributing payments received in respect of one or
more junior series of Equipment Notes to more senior Classes of Certificates. If
this should occur, the interest accruing on the remaining Equipment Notes would
be less than the interest accruing on the remaining Certificates because the
Certificates would have a greater proportion of high interest rate junior
classes. As a result of this possible interest shortfall, the holders of one or
more junior Classes of Certificates may not receive the full amount due them
after a Triggering Event even if all the Equipment Notes are eventually paid in
full. See "Description of the Intercreditor Agreement".
CONTROL OVER COLLATERAL; SALE OF COLLATERAL
Pursuant to the Intercreditor Agreement, the Trustee and the Liquidity
Provider will agree that, with respect to any Indenture at any given time, the
Indenture Trustee will be directed (a) in taking, or refraining from taking, any
action with respect to such Indenture or the Equipment Notes issued thereunder,
so long as no Indenture Event of Default has occurred and is continuing
thereunder, by the holders of at least a majority of the outstanding principal
amount of the Equipment Notes issued thereunder (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 (a) in accordance with
the directions of the Trustees representing holders of Certificates representing
an undivided interest in such principal amount of Equipment Notes) and (b)
subject to certain conditions in exercising remedies thereunder (including
acceleration of such Equipment Notes or foreclosing the lien on the Equipment
securing such Equipment Notes) after the occurrence and during the continuance
of an Indenture Event of Default thereunder, by the Controlling Party. See
"Description of the Certificates -- Indenture Events of Default and Certain
Rights Upon an Indenture Event of Default" for a description of the rights of
the Certificateholders of each Trust to direct the respective Trustee.
Notwithstanding the foregoing, subject to certain limitations, the Liquidity
Provider shall have the right to elect to become the Controlling Party at any
time after 18 months from the acceleration of the Equipment Notes, if at the
time of such election the Liquidity Obligations have not been paid in full. For
purposes of giving effect to the foregoing, the Trustee (other than the
Controlling Party) shall 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) to exercise their
voting rights as directed by the Controlling Party.
Upon the occurrence and during the continuation of any Indenture Event of
Default under any Indenture, the Controlling Party may accelerate and, subject
to the provisions of the following paragraph, sell all (but not less than all)
of the Equipment Notes issued under such Indenture to any person. The market for
Equipment Notes at the time of the existence of any Indenture Event of Default
may be very limited, and there can be no assurance as to the price at which they
could be sold. If the Controlling Party sells any such Equipment Notes for less
than their outstanding principal amount, certain Certificateholders will receive
a smaller amount of principal distributions than anticipated and will not have
any claim for the shortfall against America West, any Owner Trustee, any Owner
Participant or any Trustee.
Subject to the right of the Owner Trustee or Owner Participant to purchase
the Equipment Notes as described under "Description of Equipment Notes --
Redemption", so long as any Certificates are outstanding, during nine months
after the earlier of (x) the acceleration of the Equipment Notes under any
Indenture or (y) the bankruptcy or insolvency of America West, without the
consent of each Trustee, (a) no Equipment 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 Equipment or such Equipment Notes, and
(b) the amount and payment dates of rentals payable by America West under the
Lease for such Equipment 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 outstanding under such
Indenture as the discount rate.
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RATINGS OF THE CERTIFICATES
It is a condition to the issuance of the Certificates that the Class A
Certificates be rated A2 by Moody's and AA- by Standard & Poor's, the Class B
Certificates be rated Baa2 by Moody's and A- by Standard & Poor's, the Class C
Certificates be rated Ba1 by Moody's and BBB- by Standard & Poor's, the Class D
Certificates be rated Ba3 by Moody's and BB by Standard & Poor's and the Class E
Certificates be rated B1 by Moody's and B+ by Standard & Poor's. A rating is not
a recommendation to purchase, hold or sell Certificates, inasmuch as such rating
does not address market price or suitability for a particular investor. There is
no assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if, in its
judgment, circumstances in the future (including the downgrading of America West
or the Liquidity Provider) so warrant. The rating of the Certificates is based
primarily on the default risk of the Equipment Notes, the availability of the
Liquidity Facility for the holders of the Certificates (other than the Class D
and the Class E Certificates), the collateral value provided by the Equipment
and the subordination in right of payment under the Intercreditor Agreement of
the Class B Certificates to the Class A Certificates, of the Class C
Certificates to the Class B Certificates, of the Class D Certificates to the
Class C Certificates and of the Class E Certificates to the Class D
Certificates. The foregoing ratings address the likelihood of timely payment of
interest (at the non-default rate) when due on the Certificates and the ultimate
payment of principal of the Certificates by the Final Legal Distribution Date.
Such ratings do not address the possibility of a PTC Event of Default, an
Indenture Event of Default, including a Lease Event of Default, or other
circumstances (such as an Event of Loss (as defined herein)) which could result
in the payment of the outstanding principal amount of the Certificates prior to
the Final Expected Distribution Date.
The reduction, suspension or withdrawal of the ratings of the Certificates
will not, in and of itself, constitute a PTC Event of Default or an Indenture
Event of Default, including a Lease Event of Default.
REPOSSESSION
Except for the Aircraft subject to the Japanese Cross-Border Lease
financings, in which case America West may not permit such Aircraft to be used,
operated or maintained in the country in which foreign financing was obtained,
the Leases do not contain general geographic restrictions on America West's (or
any Permitted Sublessee's) ability to operate the Equipment. Although America
West has no current intention to do so, America West is permitted, upon
compliance with the Leases and the Refunding Agreements, to sublease the
Equipment and to register the Aircraft in foreign jurisdictions. While the
Indenture Trustee's rights and remedies in the event of a default under the
related Lease include the right to terminate such Lease (and any sublease) and
repossess the related Equipment, it may be difficult, expensive and
time-consuming to obtain possession of such Equipment, particularly when such
Equipment has been registered in a foreign jurisdiction or is located outside
the United States or is subleased to a foreign operator. Any such exercise of
the right to repossess Equipment will be subject to the limitations and
requirements of applicable law, including the need to obtain consents or
approvals for deregistration or re-export of the Aircraft, which may be subject
to delays and to political risk. When a defaulting Permitted Sublessee or other
permitted transferee is the subject of a bankruptcy, insolvency or similar
event, such as protective administration, additional limitations on the exercise
of remedies may apply. Furthermore, certain jurisdictions may accord higher
priority to certain other liens or other third-party rights over the Equipment
than the lien of the related Indenture. These factors could limit the benefits
of the security interest in the Equipment.
As permitted under the Leases, an Airframe subject to a Lease may be
equipped with Engines which are not subject to the same Lease, and Engines
subject to a Lease may not be on an Airframe subject to that or another Lease.
As a result, notwithstanding America West's agreement in the Leases to return
the related Engines owned by the applicable Owner Trustee on the return of the
related repossessed Airframe, at the time of obtaining repossession of an
Airframe it could be difficult, expensive and time-consuming to assemble an
Aircraft consisting of an Airframe and related Engines subject to such Lease.
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<PAGE> 33
CROSS-BORDER LEASES
Two Aircraft securing the obligations under the two related Indentures are
subject to Japanese Cross-Border Lease financings with terms expiring in 1999.
The rights of the Cross-Border Lessee (as defined herein) under each of these
financings have been assigned to the relevant Owner Trustees.
Under the terms of each of the Cross-Border Lease financings, title to the
relevant Aircraft is held by a special purpose Japanese entity. In summary, the
Japanese lease financing documentation provides that, subject to various terms
and conditions, the relevant Cross-Border Lessee is entitled to acquire title to
the relevant Aircraft on termination thereof, upon not less than 90 days' notice
and upon payment of an agreed sum upon a voluntary termination, and otherwise
whether or not an agreed sum is paid. To the extent, if any, that passage of
title is conditioned upon payment of an agreed sum, the obligation to pay such
sum has been assumed (against receipt of cash) by a foreign financial
institution or, to the extent not so assumed, cash collateralized by or on
behalf of the relevant Cross-Border Lessee. In addition, each Cross-Border
Lessor (as defined herein) has expressly agreed that its interest in the
Aircraft is subject and subordinate to the security interest of the relevant
Indenture Trustee.
The ability of an Indenture Trustee to realize upon its security interest
in an Aircraft that is subject to a Cross-Border Lease financing could be
adversely affected if the relevant Cross-Border Lessor or any investor in such
lessor were to become a debtor in a bankruptcy or similar proceeding in its home
jurisdiction and a creditor, trustee in bankruptcy, liquidator, receiver or
similar official were to take the position that the related Aircraft should be
treated as part of the estate of such lessor or investor, as the case may be
(particularly, if at the same time the Indenture Trustee is seeking to exercise
remedies under the related Indenture). If such a position were to be taken in
such a proceeding, a delay in the transfer or re-acquisition of title to such
Aircraft to or by the relevant Owner Trustee following the occurrence and
continuance of a Lease Event of Default (as defined herein) under the related
Lease could occur. Such a delay might impede the ability of an Indenture Trustee
to realize upon the Aircraft collateral securing the related Equipment Notes.
Legal opinions from Japanese counsel (based on certain assumptions and
qualifications) will be given to the effect that the interests of the relevant
Cross-Border Lessor have been validly subordinated to the lien of the relevant
Indenture Trustee, and that any liquidator, receiver, trustee or any other
similar officer of the Cross-Border Lessor should not be entitled to deny or
contest such subordination in a bankruptcy or similar proceeding in Japan. There
can be no assurance, however, that the circumstances or the law upon which such
counsel based their opinions will not change, that a court of competent
jurisdiction in Japan would not find differently, that such opinions would prove
to be correct or that the law of another jurisdiction would not apply.
The information set forth above regarding Cross-Border Lease financings was
provided by GPA and America West takes no responsibility for the accuracy
thereof.
MAINTENANCE
America West is responsible for the maintenance, service, repair and
overhaul of the Equipment to the extent described in the Leases. The failure of
America West (or any Permitted Sublessee (as defined herein)) to maintain,
service, repair or overhaul adequately an Aircraft or a Spare Engine may
adversely affect the value of such Aircraft or Spare Engine and thus, upon a
liquidation of the Equipment, may affect the proceeds available to repay the
holders of the related Equipment Notes. Under the Leases, the applicable
maintenance standards may vary depending upon the jurisdiction in which an
Aircraft is registered and whether an Aircraft is subleased, but America West is
obligated to cause such Aircraft to be maintained 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. Notwithstanding compliance by America West
(or any Permitted Sublessee) with its obligations under the Lease to maintain,
service, repair or overhaul adequately the Equipment, the value of the Equipment
may deteriorate. Such a deterioration in the value of the Equipment would not,
in and of itself, constitute a breach by America West of its obligations under
the Leases. See "Description of the Equipment Notes -- The Leases".
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<PAGE> 34
INSURANCE
America West is responsible for the maintenance of public liability,
property damage and all-risk aircraft hull insurance on the Equipment to the
extent described in the Leases. The failure of America West to adequately insure
the Equipment will affect the proceeds which could be obtained upon an Event of
Loss and, thus, may affect the proceeds available to repay the holders of the
related Equipment Notes.
With respect to any hull insurance required, America West may maintain
deductibles of up to $1.0 million per Aircraft. See "Description of the
Equipment Notes -- The Leases -- Insurance".
ABSENCE OF A PUBLIC MARKET FOR THE CERTIFICATES
There has been no market for the Certificates prior to the sale of the
Certificates. The Underwriters have advised the Company that they currently
intend to make a market in the Certificates as permitted by applicable law. No
Underwriter, however, is obligated to make a market in the Certificates and any
such market-making may be discontinued at any time at the sole discretion of
such Underwriter. Accordingly, no assurance can be given as to the development
or liquidity of any market for the Certificates.
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<PAGE> 35
USE OF PROCEEDS
The Certificates are being issued in connection with 11 separate leveraged
lease transactions with respect to the refinancing of the current indebtedness
of the Owner Trustees previously incurred to finance the purchase of the
Aircraft and the Spare Engines. Such indebtedness bore interest at a weighted
average rate per annum of approximately 7.97% as of November 7, 1996 and matures
at various dates between 1996 and 2009. America West will not receive any of the
proceeds from the sale of the Certificates.
The proceeds from the sale of the Certificates are to be used by the
Trustee on behalf of the Trusts to purchase $218,560,054 aggregate principal
amount of Equipment Notes to be issued by the related Owner Trustees. Such
Equipment Notes will be issued under the Indentures on a non-recourse basis by
the Owner Trustees and will represent in the aggregate the entire debt portion
of the leveraged lease transactions relating to all of the Equipment. The
proceeds from the sale of the Equipment Notes will be used to repay all of the
current indebtedness of the Owner Trustees with respect to the Aircraft and the
Spare Engines, including the Equipment Trust Certificate (as defined below), and
any proceeds remaining after such repayment may be used to pay certain costs and
expenses of the Original Lessees, such as break-funding costs and redemption
premiums, incurred in the refinancing and which would otherwise be borne
directly by the Original Lessees (as defined below). Morgan Stanley & Co.
Incorporated purchased on September 3, 1996 a $23,178,000 9.125% equipment trust
certificate (the "Equipment Trust Certificate") evidencing indebtedness of an
Owner Trustee with respect to an Aircraft, which proceeds were used by the Owner
Trustee to repay an equipment trust certificate maturing in September 1996
issued by such Owner Trustee under an indenture related to such Aircraft.
When originally acquired, the Aircraft and the Spare Engines were delivered
to an operator-sublessee other than America West, from which they were, shortly
after delivery, returned to, or were originally delivered directly to, certain
U.S.-domiciled subsidiaries of GPA. The Aircraft were leased from the Owner
Trustees to such subsidiaries, as original lessees (each, an "Original Lessee")
and sublessors. After a period of storage the Aircraft and the Spare Engines
were, in September 1990, subleased by the Original Lessees to America West. See
"Certain Transactions". In addition, certain of these Aircraft at the time of
lease to the Original Lessees were, and continue to be, subject to certain
cross-border transactions with foreign lessors. See "Description of the
Equipment Notes -- Cross-Border Leases". In connection with the refinancing of
the Aircraft and the Spare Engines, each Original Lessee's interests under
leases between the Owner Trustees and such Original Lessee, as lessee, are being
assigned to America West and the leases will be amended and restated as leases
between the Owner Trustees and America West, with each Original Lessee being
released from future obligations thereunder.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
America West for the periods indicated. The ratio of earnings to fixed charges
represents the number of times that fixed charges were covered by earnings. In
computing the ratio, earnings consist of income (loss) before income taxes and
extraordinary items plus fixed charges, less capitalized interest. Fixed charges
consist of interest expense including amortization of debt expense, one-third of
rental expense, which is considered representative of an interest factor, and
capitalized interest.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
REORGANIZED COMPANY --------------------------------
- ----------------------------------------------------------- PERIOD FROM
NINE MONTHS NINE MONTHS PERIOD FROM JANUARY 1 YEAR ENDED
ENDED ENDED YEAR ENDED AUGUST 26 TO TO DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, AUGUST 25, ------------------
1996 1995 1995 1994 1994 1993 1992 1991
- ------------- ------------- ------------ ------------ ----------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1.14 1.84 1.73 1.38 * 1.28 * *
</TABLE>
- ---------------
* For the period ended August 25, 1994, earnings were insufficient to cover
fixed charges by $201.2 million. For the years ended December 31, 1992 and 1991,
earnings were insufficient to cover fixed charges by $131.8 million and $228.7
million, respectively.
34
<PAGE> 36
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1996. The table should be read in conjunction with the Company's
financial statements and the related notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
--------------
<S> <C>
(IN THOUSANDS)
Long-term debt, including current maturities................................. $382,477
Stockholders' equity:
Preferred Stock (48,800,000 shares authorized and no shares issued and
outstanding)............................................................ --
Class A Common Stock (1,200,000 shares authorized and 1,200,000 shares
issued and outstanding)................................................. 12
Class B Common Stock (100,000,000 shares authorized and 44,613,981 shares
issued and outstanding)................................................. 446
Additional paid-in capital................................................... 576,471
Retained earnings............................................................ 58,070
--------------
634,999
Less Treasury Stock (1,382,000 shares of Class B Common Stock at cost)....... (25,504)
Total stockholders' equity................................................. 609,495
--------------
Total capitalization......................................................... $991,972
===========
</TABLE>
35
<PAGE> 37
SELECTED FINANCIAL AND OPERATING DATA
The selected data presented below under the captions "Statements of
Operations Data" and "Balance Sheet Data" for, and as of, (i) the year ended
December 31, 1995, the period August 26, 1994 to December 31, 1994, the period
January 1, 1994 to August 25, 1994, and each of the years in the three-year
period ended December 31, 1993, are derived from the financial statements of the
Company, which financial statements have been audited by KPMG Peat Marwick LLP,
independent certified public accountants and (ii) the periods ended September
30, 1996 and 1995 are derived from the unaudited condensed financial statements
of the Company. In the opinion of management, the unaudited condensed financial
statements reflect all adjustments, which are of a normal recurring nature,
necessary for a fair presentation. The selected data should be read in
conjunction with the financial statements, the related notes and the independent
auditors' report included elsewhere herein. The independent auditors' report for
the period August 26, 1994 to December 31, 1994, the period January 1, 1994 to
August 25, 1994, and for the year ended December 31, 1995 contains an
explanatory paragraph that states the financial statements of the Reorganized
Company reflect the impact of adjustments to reflect the fair value of assets
and liabilities under fresh start reporting. As a result, the financial
statements of the Reorganized Company are presented on a different basis than
those of the Predecessor Company and, therefore, are not comparable in all
respects.
As a result of the filing by the Company of a voluntary petition to
reorganize under Chapter 11 of the Bankruptcy Code on June 27, 1991 and
operating as a debtor-in-possession until August 25, 1994, the selected
financial data for periods prior to June 27, 1991 are not comparable to periods
subsequent to periods subsequent to such date.
<TABLE>
<CAPTION>
REORGANIZED COMPANY
--------------------------------------------------------- PREDECESSOR
PERIOD FROM COMPANY(1)
AUGUST 26 ------------
NINE MONTHS NINE MONTHS YEAR ENDED TO PERIOD FROM
ENDED ENDED DECEMBER DECEMBER JANUARY 1 TO
SEPTEMBER 30, SEPTEMBER 30, 31, 31, AUGUST 25,
1996 1995 1995(2) 1994 1994
------------- ------------- ----------- ----------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA
Operating Revenues........................ $ 1,299,617 $ 1,154,333 $1,550,642 $ 469,766 $ 939,028
Operating income (loss)................... 43,258 (3) 132,012 154,732 38,871 107,506
Income (loss) before income taxes and
extraordinary items...................... 17,690 95,278 108,378 19,736 (201,209)
Income (loss) before extraordinary
items.................................... (2,458) 48,782 54,770 7,846 (203,268)
Extraordinary items(4).................... (1,105) (984) (984) -- 257,660
Net income (loss)......................... (3,563) 47,798 53,786 7,846 54,392
Earnings (loss) per share(5):
Primary.................................. (0.08) 1.04 1.16 .17 1.99
Fully diluted............................ (0.08) 1.03 1.15 .17 1.41
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital deficiency................ $ (136,467) $ (77,306) $ (70,416) $ (47,927) $ (163,572)
Total assets.............................. 1,539,389 1,642,831 1,588,709 1,545,092 1,053,780
Long-term debt, less current
maturities(6)............................ 336,235 376,655 373,964 465,598 597,839
Total stockholders' equity (deficiency)... 609,495 643,488 649,472 595,446 (286,395)
OPERATING DATA:
Available seat miles (in millions)........ 15,863 14,503 19,421 6,424 11,636
Revenue passenger miles (in millions)..... 11,341 10,035 13,313 3,972 8,261
Passenger load factor (%)................. 71.5 69.2 68.5 61.8 71.0
Yield per revenue passenger mile
(cents).................................. 10.81 10.79 10.91 11.02 10.68
Passenger revenue per available seat mile
(cents).................................. 7.73 7.47 7.48 6.81 7.58
Operating cost per available seat mile
(cents).................................. 7.92 (3) 7.05 7.19 (7) 6.71 7.15
Full time equivalent employees (at end of
period).................................. 9,208 9,786 8,712 10,715 10,849
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C><C> <C> <C>
STATEMENTS OF OPERATIONS DATA
Operating Revenues........................ $ 1,325,364 $ 1,294,140 $ 1,413,925
Operating income (loss)................... 121,054 (74,812) (104,657)
Income (loss) before income taxes and
extraordinary items...................... 37,924 (131,761) (222,016)
Income (loss) before extraordinary
items.................................... 37,165 (131,761) (222,016)
Extraordinary items(4).................... -- -- --
Net income (loss)......................... 37,165 (131,761) (222,016)
Earnings (loss) per share(5):
Primary.................................. 1.50 (5.58) (10.39)
Fully diluted............................ 1.04 (5.58) (10.39)
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital deficiency................ $ (124,375) $ (201,567) $ (51,158)
Total assets.............................. 1,016,743 1,036,441 1,111,144
Long-term debt, less current
maturities(6)............................ 620,992 647,015 726,514
Total stockholders' equity (deficiency)... (254,262) (294,613) (166,510)
OPERATING DATA:
Available seat miles (in millions)........ 17,190 19,271 20,627
Revenue passenger miles (in millions)..... 11,221 11,781 13,030
Passenger load factor (%)................. 65.3 61.1 63.2
Yield per revenue passenger mile
(cents).................................. 11.11 10.31 10.22
Passenger revenue per available seat mile
(cents).................................. 7.25 6.30 6.46
Operating cost per available seat mile
(cents).................................. 7.01 7.10 7.36
Full time equivalent employees (at end of
period).................................. 10,544 10,233 11,561
</TABLE>
36
<PAGE> 38
- ---------------
(1) Includes net expenses incurred by the Predecessor Company in connection with
its reorganization of $273.7 million for the period January 1 to August 25,
1994 and $25.0 million, $16.2 million and $58.4 million for the years ended
December 31, 1993, 1992 and 1991, respectively.
(2) Costs associated with the Company's outsourcing of its heavy aircraft
maintenance resulted in a pretax restructuring charge of approximately $10.5
million.
(3) Reflects a $65.1 million nonrecurring special charge related to the
Company's renegotiation of its AVSA aircraft purchase agreement and
writedown of certain aircraft related inventory and equipment and
underutilized facilities as well as certain other adjustments.
(4) Includes (i) an extraordinary loss of $1.1 million in the nine months ended
September 30, 1996 relating to prepayment of indebtedness, (ii) an
extraordinary loss of $984,000 in the nine months ended September 30, 1995
and the year ended December 31, 1995 resulting from the exchange of debt by
the Company and (iii) an extraordinary gain of $257.7 million in the period
from January 1 to August 25, 1994 resulting from the discharge of
indebtedness pursuant to the consummation of the plan of reorganization.
(5) Historical per share data for the Predecessor Company are not meaningful
since the Company has been recapitalized and has adopted fresh start
reporting as of August 25, 1994.
(6) Includes certain balances reported as "Estimated Liabilities Subject to
Chapter 11 Proceedings" for the Predecessor Company.
(7) Restructuring costs associated with the Company's outsourcing of its heavy
aircraft maintenance resulted in an increase in cost per available seat mile
of .05 cents for the year ended December 31, 1995.
37
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL FACTORS AFFECTING COMPANY RESULTS
The Company's operating results are significantly affected by general
economic conditions as well as competitive factors, jet fuel price levels,
government regulations, taxes on jet fuel and taxes specific to the air
transport industry and other conditions affecting the airline industry. From
1990 to 1992, the airline industry experienced significant operating losses.
These losses were attributable in large part to high fuel prices, depressed
traffic levels and intense fare competition among airlines brought about by the
Persian Gulf conflict, a fear of terrorism in the United States and the
deepening national recession. America West was acutely affected by these
conditions, as it had incurred high levels of indebtedness to finance fleet
expansions beyond its core base of operations. As a result of the effects of
these conditions, the Company filed for bankruptcy protection in 1991. The
Company completed its reorganization under Chapter 11 of the Bankruptcy Code in
August 1994. In recent periods, airlines have achieved generally improved
operating results as a result of more favorable economic conditions and as
carriers have focused on their areas of relative strength, eliminating service
to under-performing markets and rationalizing operations, route systems and
pricing strategies.
In addition, the Company, under new leadership that has been in place since
the Reorganization, developed and implemented a restructuring plan focusing on
the Company's competitive strengths, which included its hub positions in Phoenix
and Las Vegas and its low cost structure. The Company reduced its fleet from
five aircraft types to three, eliminated routes that did not adequately support
strategic objectives and implemented cost reduction programs.
America West began to achieve positive results beginning in 1993 due to an
operational restructuring, combined with a gradually improving economic climate
and a more rational pricing environment. As a result, the Company achieved 14
consecutive quarters of profitability beginning with the first quarter of 1993
through June 1996.
The Company operates with one of the lowest cost structures among the major
U.S. airlines. To the extent that other carriers are successful in reducing
their operating costs, the advantage which the Company enjoys as a result of its
low cost structure would be reduced. For this reason, maintaining a low cost
structure is one of the Company's strategic imperatives. In May 1995, a
five-year collective bargaining agreement with the Company's pilots became
effective. The terms of this contract are consistent with the Company's goal of
maintaining its low unit cost structure. Specifically, the agreement provides
for a salary level increase at a compound annual rate of approximately 5.7
percent and includes provisions relating to pilot productivity which management
estimates will result in productivity increases of approximately 2 percent per
year. A significant portion of such salary level increase was effected in May
1995 in order to provide the pilots with a pay and benefits package competitive
with other low cost carriers. Salary level increases after the May 1995 increase
will occur through April 2000 at a compound annual rate of approximately 2.5
percent.
Also consistent with its goal of maintaining a low cost structure, in
December 1995, the Company outsourced its heavy aircraft maintenance, which
reduced the Company's workforce by approximately 500. Costs associated with the
outsourcing resulted in a restructuring charge against fourth quarter 1995
operating income of approximately $10.5 million.
Commencing October 1, 1995, operating costs of the Company were affected by
the expiration of a 4.3 cents per gallon federal tax exemption for commercial
aviation fuel. The expiration of such exemption increased the Company's annual
operating expenses, which increase is expected to be approximately $14.6 million
for 1996 based upon the Company's expected 1996 fuel consumption levels. Debate
continues in the Congress as to whether the exemption from the federal fuel tax
previously granted to the commercial airlines should be reinstated, but there
can be no assurance that the jet fuel tax will be repealed, either temporarily
or permanently. See "Risk Factors -- Industry Related Risks -- Aircraft Fuel".
On August 20, 1996, the Small Business Job Protection Act of 1996
reinstated the federal air transportation excise taxes (the 10 percent domestic
ticket tax, the 6.25 percent air cargo tax and the $6.00 international departure
tax) effective August 27, 1996. Management believes that the Company benefitted
from the expiration of the federal aviation excise tax on December 31, 1995 and
that the reimposition of such excise tax on August 27, 1996 has a negative
impact on the Company, although the amount of such benefit or
38
<PAGE> 40
negative impact directly resulting from the excise tax cannot be precisely
determined. The reinstated federal air transportation excise taxes expire on
December 31, 1996 and it is unclear at this time whether the taxes will be
extended beyond the expiration date.
The Company's operating costs have been and will continue to be affected by
various safety, security and other regulations and requirements applicable to
its operations. See "Risk Factors -- Industry Related Risks -- FAA Funding",
"-- Security and Safety Measures" and "-- Other Regulatory Matters".
The Company's actual income tax liability (i.e., income taxes payable) is
considerably lower than income tax expense for financial reporting purposes due
principally to the utilization of net operating loss and certain tax credit
carryforwards and the effects of fresh start reporting. The amortization of the
excess reorganization value is not deductible for income tax purposes, giving
rise to an effective tax rate for financial reporting purposes that is
significantly greater than the current U.S. corporate statutory rate of 35%. See
"-- Liquidity and Capital Resources".
IMPACT OF FRESH START REPORTING
In connection with its emergence from bankruptcy in August 1994, the
Company adopted fresh start reporting in accordance with Statement of Position
90-7 "Financial Reporting by Entities in Reorganization under the Bankruptcy
Code" ("SOP 90-7") of the American Institute of Certified Public Accountants.
Fresh start reporting significantly affects the Company's statements of
operations including the financial statement accounting for income taxes.
However, actual cash flows, including cash taxes payable, do not materially
change as a result of fresh start reporting.
Under fresh start reporting, the reorganization value of the Company has
been allocated to its assets and liabilities on a basis substantially consistent
with purchase accounting. The portion of reorganization value not attributable
to specific tangible assets has been recorded as "Reorganization Value in Excess
of Amounts Allocable to Identifiable Assets". Certain fresh start reporting
adjustments, primarily related to the adjustment of the Company's assets and
liabilities to fair market values, have had and will have a significant effect
on the Company's statements of operations. The more significant adjustments
relate to (i) reduced rent expense due to the re-valuation of aircraft leases to
market rates, (ii) reduced maintenance expense due to the write off of
previously capitalized overhauls, (iii) reduced depreciation expense on property
and equipment due to the re-valuation of such assets to fair value, (iv) the
addition of amortization expense relating to reorganization value in excess of
amounts allocable to identifiable assets, (v) increased interest expense due to
the re-valuation of aircraft leases to market rates, and (vi) increased income
tax expense principally because the amortization of excess reorganization value
is not deductible for income tax purposes, giving rise to an effective tax rate
for financial reporting purposes that is significantly greater than the current
U.S. corporate statutory rate of 35 percent.
The Company's actual income tax liability (i.e., income taxes payable) is
considerably lower than income tax expense for financial reporting purposes due
in part to the utilization of net operating loss and certain tax credit
carryforwards.
SEASONALITY
Due to the greater demand for air travel during the summer months, revenues
in the airline industry in the second and third quarters of the year tend to be
greater than revenues in the first and fourth quarters of the year. Other
factors that are not necessarily seasonal also significantly affect results,
including the extent and nature of price and other competition from other
airlines, changing levels of operations, domestic and international events, fuel
prices and general economic conditions.
39
<PAGE> 41
SELECTED OPERATING DATA
The table below sets forth selected operating data for America West. The
data for the year ended December 31, 1994 is on a combined basis for the
Reorganized and Predecessor Company.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------------- ------------------------------------------------------
PERCENT COMBINED PERCENT PERCENT
CHANGE BASIS CHANGE CHANGE
1996 1995 1996-1995 1995 1994 1993 1995-1994 1994-1993
------ ------ --------- ------ -------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available seat miles (in
millions).................. 15,863 14,503 9.4 19,421 18,060 17,190 7.5 5.1
Revenue passenger miles (in
millions).................. 11,341 10,035 13.0 13,313 12,233 11,221 8.8 9.0
Load factor (percent)........ 71.5 69.2 3.3 68.5 67.7 65.3 1.2 3.7
Yield per revenue passenger
mile (cents)............... 10.81 10.79 0.2 10.91 10.79 11.11 1.1 (2.9)
Revenue per available seat
mile
Passenger (cents).......... 7.73 7.47 3.5 7.48 7.31 7.25 2.3 0.8
Total (cents).............. 8.19 7.96 2.9 7.98 7.80 7.71 2.3 1.2
Passenger enplanements (in
thousands)................. 13,558 12,653 7.2 16,848 15,669 14,740 7.5 6.3
Average stage length
(miles).................... 723 687 5.2 686 676 645 1.5 4.8
Average passenger journey
(miles).................... 1,028 996 3.2 986 979 970 0.7 0.9
Average daily aircraft
utilization (hours)........ 11.7 11.4 2.6 11.4 11.2 10.7 1.8 4.7
Aircraft (end of period)..... 99 91 8.8 93 87 85 6.9 2.4
Full time equivalent
employees (end of
period).................... 9,208 9,786 (5.9) 8,712 10,715 10,544 (18.7) 0.2
</TABLE>
The table below sets forth the major components of operating expense per
ASM for America West for the applicable periods. The data for the year ended
December 31, 1994 is shown on a combined basis for the Reorganized and
Predecessor Company.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- --------------------------------------------------
PERCENT COMBINED PERCENT PERCENT
CHANGE BASIS CHANGE CHANGE
1996 1995 1996-1995 1995 1994 1993 1995-1994 1994-1993
---- ---- --------- ---- -------- ---- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(IN CENTS)
Salaries and related costs............. 1.83 1.96 (6.6) 1.97 1.83 1.78 7.7 2.8
Aircraft rents......................... .94 .89 5.6 .89 .89 .96 -- (7.3)
Other rents and landing fees........... .52 .56 (7.1) .56 .58 .64 (3.4) (9.4)
Aircraft fuel.......................... 1.05 .87 20.7 .90 .88 .97 2.3 (9.3)
Agency commissions..................... .63 .64 (1.6) .64 .64 .62 -- 3.2
Aircraft maintenance materials and
repairs.............................. .57 .31 83.9 .34 .25 .18 36.0 38.9
Depreciation and amortization.......... .25 .25 -- .25 .40 .48 (37.5) (16.7)
Amortization of reorganization value in
excess of amounts allocable to
identifiable assets.................. .12 .17 (29.4) .17 .07 -- 142.9 --
Restructuring charges.................. -- -- -- .05 -- -- -- --
Nonrecurring special charge............ .41 -- -- -- -- -- -- --
Other.................................. 1.60 1.40 14.3 1.42 1.45 1.38 (2.1) 5.1
---- ---- --------- ---- --- ---- --------- ---------
7.92 7.05 12.3 7.19 6.99 7.01 2.9 (.3)
==== ==== ======== ==== ======== ==== ======== ========
</TABLE>
40
<PAGE> 42
RESULTS OF OPERATIONS
The following discussion provides an analysis of the Company's results of
operations and reasons for material changes therein for the (i) three month
periods ended September 30, 1996 and 1995, (ii) nine-month periods ended
September 30, 1996 and 1995 and (iii) year ended December 31, 1995 and the
combined period from August 26 to December 31, 1994 and January 1 to August 25,
1994 and the year ended December 31, 1993. The Company's results of operations
for the periods subsequent to August 25, 1994 have not been prepared on a basis
of accounting consistent with its results of operations for periods prior to
August 26, 1994 due to the implementation of fresh start reporting upon the
Company's emergence from bankruptcy.
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
For the three months ended September 30, 1996, the Company realized a net
loss of $45.7 million. That net loss included a pretax, nonrecurring special
charge of $65.1 million and a tax benefit for financial reporting purposes of
$15.8 million. Approximately $49.7 million of the nonrecurring special charge
was associated with the Company's restructuring of its aircraft purchase
agreement with AVSA S.A.R.L., an affiliate of Airbus Industrie ("AVSA"), the
reevaluation of the Company's facilities, and the completion of its plan for the
disposition of certain aircraft related inventories and equipment. The charge
includes $18.8 million for cancellation penalty payments; write-off of
capitalized interest on advance payments; a provision for maintenance costs on
certain leased aircraft currently scheduled to be returned due to accelerated
deliveries under the new agreement; $7.5 million to reduce the carrying value to
estimated fair value of certain under-utilized facilities and $23.4 million to
write-down certain aircraft related inventories and equipment to estimated fair
value. The remaining $15.4 million of the charge represents loss contingencies
based on estimated settlements of pending and threatened litigation. Excluding
the nonrecurring special charge, the Company recorded pretax earnings of $3.6
million. Comparative figures for the third quarter of 1995 were net income of
$21.7 million, pretax income of $43.1 million and income tax expense for
financial reporting purposes of $20.4 million before extraordinary item.
The decline in pretax income (excluding the nonrecurring special charge and
before the extraordinary item) for the 1996 period resulted from lower yields
caused by untimely revenue decisions made in June and July of 1996, high jet
fuel prices and operating dependability difficulties encountered during the
summer of 1996. Industry capacity increases and aggressive fare sale activity
also impacted the 1996 third quarter. Revenue per available seat mile ("RASM")
decreased by 6.6 percent in the 1996 period from the 1995 period, revenue per
passenger mile (yield) decreased 7.2 percent, and the average price of jet fuel
increased 22.5 percent.
Total operating revenues were $422.5 million for the three months ended
September 30, 1996 compared to $408.6 million in the 1995 period. Passenger
revenues were $397.9 million, an increase of 3.5 percent over the prior period.
Cargo and other revenues increased 1.7 percent to $24.6 million for the third
quarter of 1996. Other revenues consist primarily of alcoholic beverage sales,
contract service sales and service charges.
Capacity, as measured by ASMs, increased 10.9 percent for the three months
ended September 30, 1996 compared to the 1995 period, primarily due to an
increase in the fleet size to 99 aircraft from 91 aircraft. Revenue passenger
miles increased 11.5 percent for the three months ended September 30, 1996
compared with the 1995 period. Load factor for the 1996 period remained
constant, on 10.9 percent higher available capacity.
Operating expense per ASM increased to 7.39 cents (excluding the 1.17 cent
cost attributable to the nonrecurring special charge) for the three months ended
September 30, 1996 from 7.08 cents for the 1995 period. The changes in the
components of operating expense per ASM are explained as follows:
- Salaries and related costs per ASM decreased 9.6 percent for the three
month period ended September 30, 1996 primarily due to a 10.9 percent
increase in ASMs. Pilot salaries increased $3.8 million due in part to
the effects of the pilot pay contract implemented in May 1995. In
addition,
41
<PAGE> 43
salaries decreased $2.9 million due to the Company's outsourcing of its
heavy aircraft maintenance in December 1995.
- Aircraft rents per ASM increased 5.7 percent for the three months ended
September 30, 1996 due principally to the addition of eight leased
aircraft to the fleet since September 30, 1995.
- Other rents and landing fees per ASM decreased primarily due to the 10.9
percent increase in ASMs for the three months ended September 30, 1996.
- As noted above, the average price per gallon of aircraft fuel increased
22.5 percent to 66.97 cents for the 1996 quarter from 54.67 cents for
the 1995 quarter. This increase in fuel price increased operating
expenses by approximately $11 million in the 1996 third quarter.
- Aircraft maintenance materials and repairs expense per ASM increased
69.4 percent or $16.3 million due primarily to an increase in
capitalized maintenance which increased capitalized maintenance
amortization expense for the 1996 period by $7.0 million compared with
the third quarter of 1995. The unamortized balance of capitalized
maintenance grew from $60 million at September 30, 1995 to $116.1
million at September 30, 1996. In addition, maintenance expense per ASM
increased further in the 1996 period due to the classification for
accounting purposes of costs associated with the outsourcing of the
Company's heavy aircraft maintenance work. This increase in maintenance
expense was substantially offset by a reduction in maintenance payroll
expense as discussed above.
- Amortization of reorganization value in excess of amounts allocable to
identifiable assets per ASM decreased due to a reduction in the
unamortized balance of excess reorganization value due to (i)
utilization of tax attributes of the pre-reorganization Company,
including net operating loss carryforwards, such reduction amounting to
$50 million in 1995 and (ii) recognition of a deferred income tax asset
of $74.7 million in 1995.
- Other operating costs per ASM increased 14 percent to 1.55 cents for the
1996 quarter from 1.36 cents for the 1995 quarter. This was due to a 4.3
cents per gallon federal fuel tax for which the Company became liable
commencing October 1, 1995, an increase in passenger traffic-related
cost such as Computer Reservation System ("CRS") fees, catering costs,
credit card discount fees, and advertising expense and an increase in
interrupted trip expense due to the operating dependability difficulties
discussed above.
- The first class installation program completed in December 1995 reduced
ASMs by 2.6 percent which had the effect of increasing operating cost
per ASM for the 1996 third quarter.
Net nonoperating expenses decreased $2.7 million to $8.4 million for the
three months ended September 30, 1996 due principally to a net decrease in
interest expense resulting from reduced levels of debt and lower interest rates.
Income tax benefit for financial reporting purposes for the three month
period ended September 30, 1996 amounted to $15.8 million compared to the $20.4
million income tax expense for the 1995 period.
In the third quarter of 1995, the Company incurred an extraordinary charge
of $984,000 net of income tax benefit of $984,000 for the prepayment of $48
million in principal of its 10 3/4% Notes.
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
For the nine months ended September 30, 1996, the Company realized a net
loss before extraordinary item of $2.5 million including the $65.1 million
nonrecurring special charge described above. This compares to net income before
extraordinary item of $48.8 million in the 1995 nine month period. Excluding the
nonrecurring special charge, the Company had pretax earnings before
extraordinary item of $82.8 million. Pre-tax income before extraordinary item
for the similar period in 1995 was $95.3 million. The Company reported record
operating, pretax and net income for the first six months of 1996, but the third
quarter of 1996 was adversely affected by the factors described above (see
"-- Three Months Ended September 30, 1996 and
42
<PAGE> 44
1995"). Income taxes for the nine month periods in 1996 and 1995 were $20.1
million and $46.5 million, respectively.
Total operating revenue was $1.3 billion for the nine months ended
September 30, 1996, up 12.6 percent from the comparable period in 1995.
Passenger revenues were $1.2 billion, an increase of 13.2 percent over the prior
period. Cargo and other revenues increased 3.7 percent to $74.1 million. Other
revenues consisted primarily of alcoholic beverage sales, contract service sales
and service charges.
Capacity, as measured by ASMs, increased 9.4 percent for the nine months
ended September 30, 1996 compared with the 1995 period primarily due to the
addition of eight aircraft to the fleet since September 30, 1995 and increased
utilization of the fleet. Revenue passenger miles increased 13.0 percent for the
nine months ended September 30, 1996 compared with the 1995 period. Load factor
for the nine month period increased 3.3 percent on 9.4 percent higher capacity
while yield remained flat when compared with the same period in 1995.
Operating expense per ASM increased to 7.51 cents (excluding the .41 cents
attributable to the nonrecurring special charge) for the nine months ended
September 30, 1996 from 7.05 cents for the same period in 1995. The changes in
components of operating expense per ASM are explained as follows:
- Salaries and related costs per ASM decreased 6.6 percent for the nine
months ended September 30, 1996 compared to 1995 primarily due to the
9.4 percent increase in ASMs. Salaries and related costs increased $7.0
million due in part to the $15.0 million increase in pilot salaries
which was partially offset by a $10.7 million reduction in salaries
related to the Company's outsourcing of its heavy aircraft maintenance
in December 1995.
- Aircraft rent per ASM increased 5.6 percent for the nine months ended
September 30, 1996 as compared to 1995, principally due to the addition
of eight aircraft to the fleet since September 30, 1995.
- Other rents and landing fees per ASM decreased 7.1 percent primarily due
to the 9.4 percent increase in ASMs for the nine months ended September
30, 1996 compared with 1995.
- The average price per gallon of aircraft fuel increased 17.4 percent to
64.12 cents for the nine months ended September 30, 1996 compared with
1995. This increase in fuel price increased operating expenses for the
nine months ended September 30, 1996 by approximately $25 million.
- Aircraft maintenance materials and repairs expense per ASM increased
83.9 percent or $45.6 million due primarily to an increase in
capitalized maintenance expense which has increased capitalized
maintenance amortization expense by $19.4 million for the nine months
ended September 30, 1996 compared with 1995. In addition, maintenance
expense per ASM increased further in the 1996 period with the
outsourcing of the Company's heavy aircraft maintenance work. That
increase was essentially a reclassification of expense and was
substantially offset by a reduction in maintenance salary expense as
discussed above.
- Amortization of reorganization in excess of amounts allocable to
identifiable assets per ASM decreased 29.4 percent due to a reduction in
the unamortized balance of excess reorganization value due to, (i)
utilization of tax attributes of the pre-reorganization Company,
including net operating loss carryforwards, such reduction amounting to
$50 million in 1995 and (ii) recognition of a deferred income tax asset
of $74.7 million in 1995.
- Other operating cost per ASM increased 14.3 percent to 1.60 cents for
the nine months ended September 30, 1996 compared with 1995. The
increase in cost for the 1996 period is primarily attributed to a 4.3
cents per gallon federal fuel tax for which the Company became liable
commencing October 1, 1995, an increase in passenger traffic-related
costs such as CRS fees, catering costs, credit card discount fees and
advertising expense and an increase in interrupted trip expense
resulting from the 1996 third quarter operating dependability
difficulties.
- The first class installation program completed in December 1995 reduced
ASMs by 2.6 percent which had the effect of increasing operating cost
per ASM for the nine month period.
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Net nonoperating expenses decreased $11.2 million to $25.6 million for the
nine month period ended September 30, 1996 compared with 1995. The 30.4 percent
decrease in cost resulted primarily from a net decrease in interest expense of
$10.6 million due to reduced levels of debt and lower interest rates for the
nine months ended September 30, 1996 as compared with 1995.
Income tax expense for financial reporting purposes for the nine months
ended September 30, 1996 and 1995 decreased to $20.1 million from $46.5 million
primarily due to lower pretax income.
For the nine months ended September 30, 1996 and 1995, the Company incurred
extraordinary charges of $1.1 million and $984,000, respectively, for the
partial prepayment of its 10 3/4% Senior Unsecured Notes. These amounts were net
of income tax benefit of $918,000 and $984,000, respectively.
YEAR ENDED DECEMBER 31, 1995 AND THE COMBINED PERIOD FROM AUGUST 26 TO
DECEMBER 31, 1994,
AND JANUARY 1 TO AUGUST 25, 1994
For the periods ended December 31, 1995 and 1994, the Company realized net
income of $53.8 million and a combined $62.2 million, respectively. Net income
for 1995 included income tax expense for financial reporting purposes of $53.6
million compared to a combined $13.9 million in 1994. The increase in income tax
expense for financial reporting purposes resulted principally from the adoption
of fresh start reporting. Net income for the combined periods of 1994 included
reorganization expense of $273.7 million and an extraordinary gain of $257.7
million.
Total operating revenues were $1.6 billion for the year ended December 31,
1995 compared to a combined $1.4 billion for 1994. Passenger revenues increased
10% to $1.5 billion during the year ended December 31, 1995. Cargo and other
revenues increased 10.7 percent to $98.4 million for 1995. The balance of other
revenues includes revenues generated primarily from alcoholic beverage sales,
headset rentals and service charges.
Capacity, as measured by ASM's, increased 7.5 percent for the year ended
December 31, 1995 compared to the combined 1994 period, primarily due to an
increase in the average stage length of 1.5 percent and the addition of six
aircraft to the fleet. Revenue passenger miles increased 8.8 percent for the
year ended December 31, 1995 compared to the combined 1994 period. Load factor
increased by 0.8 points and yield increased 1.1 percent for the year ended
December 31, 1995 compared to the combined 1994 period.
Operating expense per ASM increased to 7.19 cents for the year ended
December 31, 1995 from 6.99 cents for the combined 1994 period. The changes in
the components of operating expense per available seat mile are explained as
follows:
- The increase in salaries and related costs per ASM is primarily the
result of accruals totaling $17.7 million for the year ended December
31, 1995 to provide for performance awards related to the Company's
profitability. In addition, such costs were affected in May 1995 by a
significant initial increase in pilot salaries under their collective
bargaining agreement and the adoption of the Company's Total Pay program
in January 1995. These pay increases were effected in order to make
employees' compensation levels more competitive with that of other low
cost carriers and local employers. These pay increases were largely
offset by improvements in productivity and through a reduction in the
size of the work force.
- Aircraft rent per ASM was flat primarily due to the decrease related to
the amortization of deferred credits recorded in the Company's
adjustment of operating leases to fair market value under fresh start
reporting; offset by the addition of six aircraft to the fleet.
- Rentals and landing fees per ASM decreased primarily due to the 7.5
percent increase in ASM's.
- The average price per gallon of aircraft fuel increased slightly to 55.8
cents for the 1995 period from 54.9 cents for the combined 1994 period.
- Aircraft maintenance materials and repairs expense per ASM increased
largely as the result of the change in classification of the
amortization expense associated with heavy engine and airframe overhauls
from depreciation and amortization expense to aircraft maintenance
materials and repairs
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expense in August 1994. For the year ended December 31, 1995 and the
period August 26 to December 31, 1994, amortization of capitalized
maintenance totaling $11.9 million and $356,000, respectively, is
included in aircraft maintenance materials and repairs expense.
Amortization of capitalized maintenance totaling $24 million for the
period January 1 to August 25, 1994 is included in depreciation and
amortization. In addition, costs associated with a new auxiliary power
unit repair agreement which commenced in April 1994 increased in 1995 as
compared to 1994.
- Depreciation and amortization expense per ASM decreased due to the $24
million change in the classification of the amortization expense
associated with capitalized aircraft maintenance materials and repairs
expense. In addition, the revaluation of property and equipment under
fresh start reporting reduced expense by $835,000. These decreases were
partially offset by an increase of $20.8 million arising from the
amortization of the reorganization value in excess of amounts allocable
to identifiable assets under fresh start reporting.
- A restructuring charge incurred in 1995 associated with the Company's
outsourcing of its heavy aircraft maintenance consisted of a provision
for employee severance and related cost of $10.5 million.
- Other operating expenses per ASM decreased primarily due to the
reduction in property taxes and the fixed nature of certain other costs.
- Operating cost per ASM also increased overall due to the first class
installation program that was completed in 1995 which caused ASM's to be
reduced by approximately 69 million.
Net nonoperating expenses decreased $281.5 million to $46.4 million for the
year ended December 31, 1995 from a combined $327.9 million for 1994. This net
decrease resulted from: a decrease in reorganization expense of $273.7 million
since the Company emerged from bankruptcy; an increase in interest income of
$10.7 million due to higher cash and cash equivalent balances in 1995; partially
offset by a net increase in interest expense of $2.0 million because the Company
did not accrue and pay interest on unsecured prepetition long-term debt during
its bankruptcy proceedings in conformity with SOP 90-7, and an increase in
interest expense due to the re-valuation of aircraft leases to market rates as
part of fresh start reporting.
Income tax expense for financial reporting purposes for the year ended
December 31, 1995 increased to $53.6 million from a combined $13.9 million in
1994 due principally to the increase in the amortization of the excess
reorganization value which is not deductible for income tax purposes.
COMBINED PERIODS FROM AUGUST 26, 1994 TO DECEMBER 31, 1994 AND JANUARY 1,
1994 TO AUGUST 25, 1994
AND THE YEAR ENDED DECEMBER 31, 1993
The Company realized net income of $62.2 million on a combined basis for
1994 compared to net income of $37.2 million for 1993. The 1994 combined results
include an extraordinary gain of $257.7 million from the discharge of certain
prepetition indebtedness and $273.7 million of reorganization expenses. The
results for 1993 include reorganization expenses of $25 million, and losses
aggregating $4.6 million primarily resulting from the disposition of surplus
spare aircraft parts and equipment.
Total operating revenues were $1.4 billion on a combined basis for 1994, an
increase of 6.3 percent compared to the prior year. Passenger revenues for 1994
and 1993 were $1.3 billion on a combined basis and $1.2 billion, respectively.
Passenger revenue per ASM increased slightly on a combined basis in 1994
compared to 1993 as the increase in load factor period over period was largely
offset by a decline in average passenger yields. The passenger revenue increases
realized in 1994 reflect a continuation of trends which commenced in 1993. These
trends reflected a gradually improving economic climate and a more stable
environment within the airline industry.
With the exception of the two aircraft deliveries late in 1994, the Company
operated an 85 aircraft fleet and realized increases in capacity over 1993 as
measured by ASMs by increasing the average stage length flown by 4.8 percent and
by increasing the average daily utilization of the aircraft by 4.7 percent.
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In the fourth quarter of 1994, certain competitive pricing initiatives were
commenced by other carriers which exerted pressure on both the Company's yield
and the load factor. The result of these initiatives, which carried over to the
first quarter of 1995, was softer traffic and generally lower yield levels. To
address these conditions, the Company announced certain fare initiatives of its
own, and selectively matched fare decreases initiated by other carriers.
Revenues from sources other than passenger fares increased to $88.9 million
on a combined basis for 1994 compared to $78.8 million for 1993. Cargo revenues
comprised 49.8 percent, or $44.3 million of other revenues on a combined basis
for 1994. The Company carried 129.6 million and 110.7 million pounds of freight
and mail, for the combined 1994 and 1993 years, respectively.
Operating expense per ASM declined to 6.99 cents on a combined basis for
1994 from 7.01 cents for 1993. The changes in the components of operating
expense per ASM are explained as follows:
- The increase in 1994 salaries and related costs on a combined basis
compared to 1993 is a result of the implementation of a pay plan in the
second quarter of 1994. Effective April 1, 1994, the Company implemented
a pay plan that increased wages by between 2 percent and 8 percent,
depending on the employee's length of service with the Company, and the
Company increased its matching contribution under the Company's 401(k)
plan. The pay program replaced a transition program that the Company had
in place from mid-1993 through the first quarter of 1994. Under the
transition program, pay increases totaling $6.5 million, including
applicable payroll taxes, were made in 1993. Such pay plans were put in
place to improve compensation to employees following a period of reduced
compensation during the bankruptcy. In addition, commencing in the third
quarter of 1993, employee award distributions based on the greater of
0.5 percent of an employee's annual base wage or $125 were made on a
quarterly basis. Such payments for 1993 totaled $2.6 million, including
applicable payroll taxes. In 1994, approximately $4.5 million in
distributions were made prior to the termination of the transition and
award pay program.
- Rentals and landing fees decreased on a combined basis in 1994 compared
to 1993 for the following reasons:
- The Company generated more ASMs in 1994 with essentially the same
sized aircraft fleet as in 1993 which, in turn, caused the rate per
ASM to decrease;
- Rent reductions were obtained at New York's John F. Kennedy Airport
and Phoenix Sky Harbor International Airport;
- Rent expense for aircraft leases were reduced to fair market rates in
August 1994 under fresh start reporting; and
- The Company vacated certain administrative office space as part of its
facilities consolidation program.
- Aircraft fuel expense decreased year over year due to the decline in the
average price per gallon to 54.9 cents from 61.1 cents for 1993.
- Agency commission expense increased on a combined basis in 1994 in
comparison to 1993 as a result of the increase in passenger revenue per
ASM. In addition, the 1994 commission expense increased because a higher
percentage of passenger revenues was generated by America West
Vacations, which pays a higher average commission rate on its sales.
- Aircraft maintenance materials and repair expense increased in 1994 as
the result of an increase in average daily utilization of the fleet to
11.2 hours per day in 1994 from 10.7 hours for 1993. This higher level
of utilization resulted in increases in line maintenance materials
usage, engine repairs and component repairs.
- Depreciation and amortization expense decreased slightly on a combined
basis in 1994 compared to 1993 as the result of a decrease in
depreciation expense arising from the re-valuation of property and
equipment under fresh start reporting, which was partially offset by an
increase in amortization
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expense arising from the amortization of the reorganization value in
excess of amounts allocable to identifiable assets under fresh start
reporting.
- The increase in other operating expense on a combined basis for 1994
compared to 1993 is due to increased expenses related to increased
passenger traffic, such as credit card discount fees, booking fees,
catering expenses and supplies.
Nonoperating expenses (net of nonoperating income) were $327.9 million on a
combined basis for 1994 and $83.1 million for 1993. Interest expense increased
to $56.6 million on a combined basis for 1994 compared to $54.2 million in 1993.
The increase in interest expense is primarily the result of the issuance of $123
million of senior unsecured notes in connection with the Company's emergence
from bankruptcy. In conformity with SOP 90-7, the Company ceased accruing and
paying interest on certain prepetition long-term debt while the Company remained
a debtor-in-possession. Had the Company continued to accrue interest on such
debt, interest expense for 1994 and 1993 would have been $67.3 million and $73.0
million, respectively. The Company incurred expenses of $273.7 million on a
combined basis in 1994 and $25 million in 1993 in connection with its efforts to
reorganize under Chapter 11. See Note 1 of Notes to Financial Statements as of
December 31, 1995 for further discussion with respect to reorganization.
Income tax expense increased significantly after August 26, 1994 due to the
amortization of the excess reorganization value which is not deductible for
income tax purposes. Income tax expense for 1993 and January 1 through August
25, 1994 reflects the benefit of the Company's net operating losses.
LIQUIDITY AND CAPITAL RESOURCES
Unrestricted cash and cash equivalents and short-term investments decreased
to $200.5 million at September 30, 1996 from $224.4 million at December 31, 1995
primarily due to the prepayment of debt and the repurchase of Class B Common
Stock and Warrants. Net cash provided from operating activities decreased to
$200.6 million for the nine months ended September 30, 1996 from $245.2 million
for the nine months ended September 30, 1995, a decrease of $44.6 million. This
decrease was principally due to the period over period change in air traffic
liability, which grew 8.9 percent in the 1996 period as compared to 78.6 percent
in the 1995 period. Net cash used in investing activities increased to $169.9
million for the nine months ended September 30, 1996 from $81.3 million for the
1995 period, an increase of $88.6 million primarily related to the reinvestment
of certain cash equivalents into certain income producing short-term investments
with maturities greater than 90 days and increased expenditures for capitalized
maintenance and automation initiatives. Net cash used in financing activities
increased to $105.3 million for the nine months ended September 30, 1996 from
the 1995 period. The increase was principally due to the repurchase of Class B
Common Stock and Warrants in 1996 which was partially offset by lower repayment
on the Company's senior unsecured notes in 1996 as compared to 1995. See
"Certain Transactions".
The Company has a working capital deficiency which was $136.5 million at
September 30, 1996 and $70.4 million at December 31, 1995. Operating with a
working capital deficiency is typical in the airline industry as tickets sold
for transportation which has not yet been provided are classified as a current
liability while the related income producing assets, the aircraft, are
classified as non-current assets. Despite the working capital deficiency, the
Company expects to meet all of its obligations as they become due.
The Company's long-term debt maturities through 1998 consist primarily of
principal amortization of notes payable secured by certain of the Company's
aircraft. At September 30, 1996, such maturities were $12.9 million, $45.7
million and $42.8 million, respectively, for the remainder of 1996, 1997 and
1998. Management expects to fund these requirements with cash from operations.
At September 30, 1996, the Company had net operating loss ("NOL")
carryforwards and general business tax credit carryforwards of approximately
$525.9 million and $12.7 million, respectively. Under Section 382 of the Code,
if a loss corporation has an "ownership change" within a designated testing
period, its ability to use its NOL and business tax credit carryforwards is
subject to certain limitations. The Company is a loss corporation within the
meaning of Section 382. The issuance of certain common stock by the Company
pursuant to the plan of reorganization resulted in an ownership change within
the meaning of Section 382.
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This ownership change has resulted in an annual limitation (the "Section 382
Limitation") upon the Company's ability to offset any post-change taxable income
with pre-change NOL. Should the Company generate insufficient taxable income in
any post-change taxable year to fully utilize the Section 382 Limitation of that
year, any excess limitation will be carried forward for use in subsequent tax
years, provided the pre-change NOL has not been exhausted nor has the
carryforward period expired. The alternative minimum tax credit may be carried
forward indefinitely and is available to reduce future income tax payable.
The Company's reorganization and the associated implementation of fresh
start reporting gave rise to significant items of expense for financial
reporting purposes that are not deductible for income tax purposes. In large
measure, it is these nondeductible expenses that result in an effective tax rate
(for financial reporting purposes) significantly greater than the current U.S.
corporate statutory rate of 35 percent. Nevertheless, the Company's actual
income tax liability (i.e., income taxes payable) is considerably lower than
income tax expense shown for financial reporting purposes. This difference in
financial expense compared to actual income tax liability is in part
attributable to tax attributes (including NOLs, subject to certain limitations)
of the predecessor to the Company that serve to reduce the Company's actual
income tax liability. To the extent the tax attributes of the predecessor to the
Company reduce the Company's actual income tax liability below the amount of
expense reflected in the financial statements, that difference is applied to
reduce the carrying balance of the Company's Reorganization Value in Excess of
Amounts Allocable to Identifiable Assets.
At September 30, 1996, the Company had leased one B737-300 aircraft and
three A320-200 aircraft, and was obligated to lease four additional aircraft
prior to June 30, 1999 under a put agreement with GPA (the "GPA Put
Agreement "). Under the GPA Put Agreement, new or used B737-300, B757-200, or
new or "like new" A320-200 aircraft may be put to the Company at a rate of no
more than one aircraft in 1996 and three aircraft per year thereafter. In
addition, for every new A320 aircraft put to the Company, the Company has the
right to reduce deliveries under the AVSA A320 purchase contract (discussed
below) on a one-for-one basis. In connection with the transactions described in
this Prospectus, the GPA Put Agreement will be terminated pursuant to a Put
Termination Agreement among GPA, the Original Lessees and the Company (the "GPA
Put Termination Agreement") and, as a result, GPA's right under the GPA Put
Agreement to put aircraft to the Company and the Company's obligation to accept
and lease such aircraft under the GPA Put Agreement will be terminated. See
"Certain Transactions".
At September 30, 1996, the Company had commitments to AVSA, for a total of
22 Airbus A320-200 aircraft with delivery dates that fall in the years 1999
through 2001. The aggregate net cost of such aircraft is based on formulae that
include certain price indices (including indices for various aircraft components
such as metal products) for periods preceding the various delivery dates. Based
on an assumed 5 percent annual price escalation, the Company estimates such
aggregate net cost to be approximately $1.2 billion. The Company has the option
to cancel without cause up to four of these aircraft. In addition, if new A320
aircraft are delivered as a result of the GPA Put Agreement, the Company has the
right to cancel on a one-for-one basis, up to a maximum of seven non-consecutive
aircraft deliveries under the AVSA agreement, subject to certain conditions. The
Company has taken delivery of three new A320 aircraft under the GPA Put
Agreement, and, therefore, at September 30, 1996, the Company had the right to
cancel up to seven aircraft deliveries under the AVSA agreement. If the Company
exercised its existing rights to cancel seven aircraft under the AVSA agreement,
the aggregate net cost (based upon the assumptions described above) of
commitments under such agreement would be reduced to approximately $900 million.
The Company has arranged for financing from AVSA for up to one-half of the
deliveries under the AVSA agreement, although the Company intends to seek
financing on more favorable terms from other sources. Additionally, the Company
will require capital from external sources to meet the balance of its financial
commitments for aircraft and other equipment orders. The Company intends to seek
such financing in the future when and as appropriate. There can be no assurance
that the Company will be able to obtain such capital in sufficient amounts or on
terms acceptable to the Company. A default by the Company under the AVSA
agreement or any such commitment could have a material adverse effect on the
Company.
In September 1996, the Company and AVSA signed a term sheet (the "AVSA Term
Sheet"), which, subject to the satisfaction of a number of conditions by
November 30, 1996, provides for the restructuring of
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the Company's arrangements with AVSA, and specifically that (i) the number of
aircraft ordered by the Company would be increased from 22 to 34 (including 24
A320 aircraft and 10 A319 aircraft), (ii) the orders subject to cancellation
would be increased from five to 12 (resulting in the Company being committed to
purchase 12 A320s and ten A319s), (iii) AVSA and the manufacturer of the engines
for the aircraft would agree to provide back-stop financing for 16 of the 22
firm orders, and (iv) the financing terms and conditions under which aircraft
would be purchased would be improved from the Company's perspective. There can
be no assurance that the conditions to the restructuring of the Company's
arrangements with AVSA will be satisfied or that a final agreement will be
reached or finalized in the form described above.
In addition, pursuant to the Company's growth plan, the Company expects to
expand its fleet, increase frequencies to existing cities and add destinations
to its route system. This expansion will require the lease or purchase of
additional aircraft. There can be no assurance that the Company will be able to
negotiate such leasing or purchase arrangements in sufficient quantities or on
terms acceptable to the Company.
As of September 30, 1996, the Company's fleet consisted of 99 aircraft, 21
of which meet the FAA's Stage II (but not Stage III) noise reduction
requirements and must be retired or significantly modified prior to the year
2000. Management is currently considering its options regarding such aircraft.
If the Company determines to modify such aircraft to comply with Stage III, the
required capital expenditures for such modifications are currently estimated to
be approximately $2 million per aircraft. There can be no assurance that the
Company will be able to obtain such capital in sufficient amounts or on
favorable terms or that the Company will be able to lease or purchase substitute
aircraft in sufficient quantities or on favorable terms if the Company elected
not to carry out such modifications.
Capital expenditures for the nine months ended September 30, 1996 and 1995
were approximately $117.4 million and $81.1 million, respectively. Included in
these amounts are capitalized maintenance of approximately $73.8 million for the
nine months of 1996 and $56.7 million for the nine months of 1995.
As of September 30, 1996, the Company under the authorization granted by
the Board of Directors in 1995, repurchased in 1996, 1,270,000 shares of Class B
Common Stock on the open market at per share prices ranging from $14.50 to
$21.88 and 2.2 million Warrants for approximately $18 million.
Certain of the Company's long-term debt agreements contain minimum cash
balance requirements, leverage ratios, coverage ratios and other financial
covenants with which the Company was in compliance at September 30, 1996.
NEW ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 123 -- "Accounting for
Stock-Based Compensation" ("SFAS 123") requires that companies can elect to
account for stock-based compensation plans using a method based upon fair value
or continue measuring compensation expense for those plans using the intrinsic
value method prescribed by Accounting Principles Board Opinion No. 25 --
"Accounting for Stock Issued to Employees" ("APB 25"). Companies electing to
continue using the intrinsic value method must make proforma disclosures in 1996
of net income and earnings per share as if the fair value based method had been
applied. The Company will continue using APB 25; therefore, SFAS 123 is not
expected to have an impact on the Company's results of operations or financial
position.
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BUSINESS
America West is the ninth largest commercial airline carrier in the United
States, operating through its principal hubs located in Phoenix, Arizona and Las
Vegas, Nevada, and a mini-hub located in Columbus, Ohio. The Company believes it
is the lowest cost full service carrier in the United States. At September 30,
1996 the Company served 53 destinations, including five destinations in Mexico
and one in Canada, with a fleet of 99 aircraft. The Company offers service to an
additional 21 destinations through an alliance agreement with Continental and 17
commuter service and regional destinations through an alliance agreement with
Mesa.
STRATEGY
America West's strategy seeks to achieve additional revenue growth and
profitability by capitalizing on the Company's key competitive strengths while
maximizing financial flexibility. This strategy focuses on (i) strengthening the
Company's position in its existing hubs through strategic expansion, (ii)
maintaining its position as a leading low cost full service carrier, (iii)
operating a modern and efficient fleet and (iv) continuing to develop its
passenger base through key alliances. Principal elements of the Company's
strategy are as follows:
STRENGTHEN POSITION IN EXISTING HUBS THROUGH STRATEGIC EXPANSION
America West's strategic plan is designed to capitalize on its strong
positions in its Phoenix and Las Vegas hubs. In connection with the Company's
restructuring, the Company's operations in Phoenix contracted somewhat during a
period when airlines generally were expanding their strategic hub operations. In
September 1995, the Company announced a two-year plan to expand its principal
hub operations and increase connecting traffic and service to longer-haul
nonstop markets. The growth plan is expected to increase ASMs by 24% and add at
least eight new cities to the Company's route network.
As the Company adds aircraft required to support the expansion of the
Phoenix hub, the Company intends to continue to optimize asset utilization
through the expansion of its night flight service to Las Vegas. By utilizing
aircraft for this service that would otherwise be idle overnight, the Company is
able to compete in a low cost market segment without diminishing asset
availability for use in its Phoenix operations. The Company believes that its
existing service at its Columbus mini-hub is adequate based on current demand.
MAINTAIN ITS POSITION AS A LEADING LOW COST FULL SERVICE AIRLINE
America West is committed to maintaining its low cost structure, which the
Company has achieved primarily through its favorable labor costs per ASM and
asset utilization enhancements. The Company has focused on increasing
productivity at all levels. From December 31, 1994 to September 30, 1996, the
Company's workforce decreased by 14% despite an increase in aircraft of 14%. In
December 1995, the Company outsourced its heavy aircraft maintenance, which
reduced the Company's workforce by approximately 500. Aircraft utilization has
been enhanced through a restructuring of the Company's route network including
expansion of its Las Vegas night flight program. The Company's fleet
configuration, consisting of three aircraft types, permits the Company to
minimize spare parts inventories and simplify maintenance and training
operations.
OPERATE A MODERN AND EFFICIENT FLEET
The Company enjoys operational efficiencies due to its modern, fuel
efficient fleet. At September 30, 1996, the Company's fleet consisted of 61
Boeing 737s, 24 Airbus A320s and 14 Boeing 757s, with an average age of
approximately ten years. Most of the Company's existing aircraft are held under
leases, including leases on 20 aircraft expiring prior to December 1998. As a
result, in the event general economic conditions change adversely, the Company
may reduce its fleet size by not renewing expiring aircraft leases.
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CONTINUE TO DEVELOP PASSENGER BASE THROUGH ALLIANCES
The Company plans to continue to capitalize on its alliance agreement with
Continental to continue to expand the Company's passenger base while achieving
cost savings through the reduction of redundant labor and facilities. This
agreement provides for codesharing arrangements, coordination of flight
schedules, linking of frequent flyer programs, sharing of ticket counter space,
coordination of ground handling operations and joint purchasing and marketing
efforts. Through codesharing, each airline is able to offer additional
destinations to its customers without materially increasing operating and
capital expenses. Management believes that its codesharing activities result in
increased demand for travel on America West and intends to pursue additional
alliances as opportunities warrant.
As a part of America West's ongoing strategy, the Company from time to time
evaluates opportunities for additional alliances and codesharing arrangements as
well as investment opportunities pursuant to which the Company may capitalize on
its key strengths and market position.
OPERATIONS
HUB OPERATIONS
The Company operates primarily through hub airports in Phoenix and Las
Vegas and, to a lesser extent, through its mini-hub in Columbus. The Company
schedules banks of flights timed to arrive at the hub from one direction at
approximately the same time and to depart toward the opposite direction a short
time later. The hub system allows the Company to transport passengers between a
large number of destinations with substantially more frequent service than if
each market were served directly.
The Company is the leading airline serving Phoenix Sky Harbor International
Airport and McCarran International Airport in Las Vegas, based upon revenue
passenger miles, with approximately 35% and 25% of total revenue passenger
miles, respectively, for the twelve months ended March 31, 1996. In both markets
the Company's principal competitor is Southwest Airlines, with approximately 22%
and 16% of total revenue passenger miles in Phoenix and Las Vegas, respectively,
in the year ended December 31, 1995. At September 30, 1996, the Company served
47 destinations from its Phoenix hub and 42 destinations from its Las Vegas hub.
At September 30, 1996, the Company provided non-stop jet service to 12
destinations from Columbus. For the twelve months ended March 31, 1996, the
Company had approximately 51% of Columbus revenue passenger miles compared to
approximately 11% for USAir, the Company's principal competitor at Columbus. The
Company offers service to an additional 21 destinations through its alliance
with Continental and 17 commuter service and regional destinations through its
alliance with Mesa.
The success of the Company's hub system depends on its ability to attract
passengers traveling to and from its hubs, as well as passengers traveling
through the hubs to the Company's other destinations. The Company believes the
success of its operations in Phoenix and Las Vegas is in part due to such
airports being among the world's largest 25 in passenger traffic and such cities
being among the fastest growing in the nation. In addition, the Company believes
these hubs are well positioned for continued growth due to their geographically
favorable locations with strategic access to key Southwestern and West Coast
markets, relatively low operating costs, year-round fair weather, and modern,
uncongested facilities.
GROWTH PLAN
The Company began a two-year growth plan in February 1996 to expand its
principal hub operations and increase connecting traffic and service to
longer-haul nonstop markets. The growth plan is expected to increase ASMs by 24%
and add at least eight new cities to the Company's route network. As part of its
growth plan, the Company has initiated service to Detroit and San Antonio and
non-stop service from Phoenix to Boston, Philadelphia, Newark and Atlanta. The
Company intends to begin service to additional major business destinations such
as Cleveland and Miami and non-stop service from Phoenix to Orlando. In
addition, flight frequencies have been increased to better serve existing West
Coast destinations and to expand connecting opportunities through Phoenix to
long-haul flights to the East and Midwest.
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The Company's growth at Phoenix will support concurrent expansion of the
Las Vegas night flight service. The growth plan provides for Las Vegas night
flight departures to increase to 50 by September 1997. The Company believes that
service at its Columbus mini-hub reflects current demand.
CONTINENTAL ALLIANCE
The Company's alliance agreement with Continental provides for codesharing
arrangements, coordinating flight schedules, sharing ticket counter space,
linking frequent flyer programs and membership clubs, and coordinating ground
handling operations. Through the alliance, the Company's Phoenix hub is able to
attract a share of the connecting traffic previously served at Continental's
Denver hub which has been downsized during the past few years. Through
codesharing, each airline is able to offer additional destinations to its
customers without materially increasing operating and capital expenses. By
placing its designation code on certain of Continental's flights, America West
is able to offer single carrier connecting service to cities that it does not
independently serve. These single carrier code shared flights generally are
afforded superior ranking over multi-carrier connecting flights in the displays
of computer reservation systems used by U.S. travel agents when booking
reservations. Management believes that its codesharing activities result in
increased demand for travel on America West. The Company has also realized
significant cost savings through this alliance primarily through the
consolidation of airport facilities and resources and the elimination of
duplicative costs for labor and equipment at key locations. In addition, through
joint purchasing, both carriers may receive greater volume discounts on certain
cost items.
MESA ALLIANCE
America West has entered into a codesharing agreement with Mesa designed to
establish Mesa as a feeder carrier for the Company at its Phoenix hub. The
codesharing agreement provides for coordinated flight schedules, passenger
handling and computer reservations under the America West flight designator
code, thereby allowing passengers to purchase one air fare for their entire
trip. Through this alliance, the Company has added 17 destinations to its route
network. Mesa operates under the name "America West Express" and has
incorporated the color scheme and commercial logo of America West on certain
aircraft utilized on these routes.
OTHER CODESHARING AGREEMENTS
The Company also has codesharing agreements with Northwest Airlines,
Aeromexico and British Airways.
AMERICA WEST VACATIONS
In 1987, the Company developed America West Vacations, which is a tour
packaging division that arranges vacation packages that include hotel
accommodations, air fare and ground transportation in certain markets. During
1995, this division sold approximately 795,000 room nights and approximately
90,000 rental car days, handled approximately 516,000 passengers and generated
approximately $180 million in gross package sales.
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AIRCRAFT
At September 30, 1996, the Company operated a fleet of 61 Boeing 737s, 24
Airbus A320s and 14 Boeing 757s as follows:
<TABLE>
<CAPTION>
AVERAGE
REMAINING
NUMBER AVERAGE LEASE
AIRCRAFT TYPE STATUS(1) AIRCRAFT AGE (YRS.) TERM (YRS)
- ---------------------------------------------------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C>
B737-100............................................ Owned 1 26.98 --
B737-200............................................ Leased 15 16.28 4.48
B737-200............................................ Owned 5 17.56 --
B737-300............................................ Leased 29 9.54 4.10
B737-300............................................ Owned 11 7.91 --
B757-200............................................ Leased 12 10.16 8.56
B757-200............................................ Owned 2 7.01 --
A320-200............................................ Leased 24 5.73 12.06
--
99 10.00 7.23
======
</TABLE>
- ---------------
(1) Each of the aircraft that is designated as owned serves as collateral for a
loan pursuant to which the aircraft was acquired by the Company or serves
as collateral for a non-purchase money loan.
Beginning in September 1996 through December 1998, leases for 20 of the
Company's aircraft are scheduled to terminate (such aircraft are 12 Boeing
B737-300s, three Boeing B737-200s, three Airbus A320-231s, and two Boeing
B757-200s). At the option of the lessor, the lease for one of the B737-300
aircraft may be extended for up to 48 months, and the leases for six of the
B737-300 aircraft may each be extended for up to 60 months, at set rates, which
are currently less than market rates. There are no contractual options to extend
any other of such leases. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
EMPLOYEES
At September 30, 1996, the Company employed 8,127 full-time and 2,453
part-time employees, for an equivalent of 9,208 full-time employees.
LABOR RELATIONS
During the Reorganization, the Company reduced its employee compensation.
Subsequently, the Company began certain initiatives to increase compensation,
including adoption of the Total Pay Program, to provide employees with a pay and
benefits package which is competitive with other low-cost airlines and local
employers. To offset such increases in compensation and to maintain its
competitive advantage as a low cost operator, the Company began to focus on
increasing productivity.
In January 1995, the Company announced its new compensation program, the
Total Pay Program. This program increased non-executive pay by approximately $25
million in fiscal 1995. This increase in compensation was more than offset by a
strategic overhaul of the Company's work processes which reduced its workforce
by approximately 1,100 employees. In addition, in December 1995, the Company
further reduced its workforce by approximately 500 in connection with the
outsourcing of its heavy aircraft maintenance. In addition, performance bonuses
("AWArd Pay") of up to 25% of base pay will be made to employees provided
certain annually established operating income targets are attained. In February
1996, the Company paid performance awards under the AWArd Pay program amounting
to 10.25% of each employee's 1995 base pay to the employees covered under this
program.
In October 1993, ALPA was certified by the NMB as the bargaining
representative of the Company's pilots. In May 1995, a five-year collective
bargaining agreement with the Company's pilots became effective. The terms of
this contract are consistent with the Company's goal of maintaining its low unit
cost structure. Specifically, the agreement provides for a salary level increase
at a compound annual rate of approximately 5.7% and includes provisions relating
to pilot productivity which management estimates will result in productivity
increases of approximately 2% per year. A significant portion of such salary
level increase was
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effected in May 1995 in order to provide the pilots with a pay and benefits
package competitive with other low cost carriers and local employers. Salary
level increases after the May 1995 increase will occur through April 2000 and
will increase at a compound annual rate of approximately 2.5%. Other terms of
the agreement include a single pay scale for all aircraft types, flexible work
rules, management's right to staff the airline and to enter into strategic
alliances and the preclusion of sympathy work stoppages.
In June 1994, the NMB accepted the AFA petition to represent the Company's
flight attendants. In September 1994, the Company's flight attendants voted in
favor of AFA representation and contract negotiations are ongoing.
In January 1996, the Company's ground operations workers petitioned the NMB
for a union representation election requesting that the Transportation Workers
Union ("TWU ") represent them. That application was later withdrawn and under
NMB rules no union will be allowed to seek to represent that work group until
early 1997.
In January 1996, the IBT filed an application with the NMB seeking to be
certified as the bargaining representative for the Company's mechanics,
including related personnel. Following a representation election in April 1996,
the NMB certified the IBT as the collective bargaining representative for that
work group. Immediately after notification of the election results, the Company
filed a lawsuit in Federal District Court in Phoenix, Arizona seeking to have
that certification declared invalid. The Company is challenging the results of
the election because of the decision of the NMB that the 378 former mechanics
and related personnel who were terminated in connection with the Company's
outsourcing of its heavy maintenance were eligible to vote in the election. In
that litigation, the Company sought a preliminary injunction declaring that it
has no obligation to negotiate with the IBT and IBT sought a preliminary
injunction ordering the Company to begin negotiations. The NMB requested that
the case against it be dismissed on the basis that the federal courts do not
have jurisdiction over NMB's conduct and management of representation elections.
In September 1996, the Court granted the NMB's motion to dismiss and the IBT's
motion for preliminary injunction. The Company intends to appeal those rulings
to the Ninth Circuit Court of Appeals. See "-- Legal Proceedings."
In April 1996, the IBT filed an application with the NMB seeking to become
the collective bargaining representative of the Company's 40 stock clerks, which
was rejected at an election in July 1996. Following the announcement of those
election results, the IBT filed a claim of election interference against the
Company. Both the Company and the IBT filed submissions with the NMB in
connection with the election interference charge, and the matter will be decided
by the NMB in due course. If the NMB rules in favor of IBT, a rerun election
will be ordered.
In September 1996, the TWU filed an application with the NMB to represent
the Company's approximately 40 dispatchers. The NMB has scheduled a
representation election to occur during late October and November 1996.
There have been numerous attempts by unions to organize the employees of
the Company, and the Company expects such organization efforts to continue in
the future. The Company cannot predict the terms of any future collective
bargaining agreement and therefore the effect, if any, on the Company's
operations or financial performance.
COMPETITION AND MARKETING
The airline industry is highly competitive and is susceptible to price
discounting, which involves the offering of discount or promotional fares to
passengers. Any such fares offered by one airline are normally matched by
competing airlines, resulting in lower industry yields with little or no
increase in traffic levels. America West competes with other major full service
airlines based on price and, due to its low cost structure, is able to compete
with other low cost carriers in its short haul local markets. The entry of
additional carriers on many of the Company's routes (as well as increased
competition from or the introduction of new services by established carriers)
could negatively impact America West's results of operations. America West
competes with a number of major airlines on medium- and long-haul routes through
its hubs and with
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Southwest Airlines for short-haul flights at its Phoenix and Las Vegas hubs and
with USAir at its Columbus mini-hub.
Most tickets for travel on America West are sold by travel agents through
computer reservation systems that have been developed and are controlled by
other airlines. Travel agents generally receive commissions based on the price
of tickets sold. Accordingly, airlines compete not only with respect to the
price of tickets sold but also with respect to the amount of commissions paid.
Airlines often pay additional commissions in connection with special revenue
programs. Federal regulations have been promulgated that are intended to
diminish preferential schedule displays and other practices with respect to the
reservation systems that place the Company and other similarly situated users at
a competitive disadvantage to the airlines controlling the systems. Effective
January 8, 1996, the Company implemented electronic or paperless ticketing,
which the Company believes will reduce distribution costs in the future.
FREQUENT FLYER PROGRAM
All major U.S. airlines have established frequent flyer programs to
encourage travel on that particular carrier. America West offers the FlightFund
program that allows members to earn mileage credits by flying America West, by
using the services of other program participants such as hotels, car rental
firms and other specialty services and by flying certain partner carriers.
Through the Company's alliance agreement with Continental, the Company has
formed a frequent flyer program partnership. FlightFund and Continental's One
Pass program members may now earn and redeem mileage credit in connection with
flights to all America West and Continental destinations. In addition, the
Company periodically offers special short-term promotions that allow members to
earn additional free travel awards or mileage credits. When a FlightFund member
accumulates mileage credits of 20,000 miles, the Company issues mileage award
certificates that can be redeemed for various travel awards, including first
class upgrades and tickets on America West or other airlines participating in
America West's frequent flyer program. Most travel awards are subject to
blackout dates and capacity controlled seating. Mileage award certificates
automatically expire after two years if issued prior to April 1, 1993 and after
three years for certificates issued after that date. Travel is valid up to one
year from the date of ticketing. FlightFund awards may also be redeemed for
flights to certain international destinations and Hawaii. America West is
required to purchase space on other airlines to accommodate such award
redemption.
The Company accounts for the FlightFund program under the incremental cost
method whereby travel awards are valued at the incremental cost of carrying one
additional passenger. Costs including passenger food, beverages, supplies, fuel,
liability insurance, purchased space on other airlines and denied boarding
compensation are accrued as frequent flyer program participants accumulate
mileage to their accounts. Such unit costs are based upon expenses expected to
be incurred on a per passenger basis. No profit or overhead margin is included
in the accrual for these incremental costs.
FlightFund's current membership is approximately 2.6 million participants.
At December 31, 1995, 1994 and 1993, the Company estimated that approximately
342,000, 369,000 and 238,000 travel awards were expected to be redeemed.
Correspondingly, the Company had an accrued liability of $10.7 million, $9.8
million and $7.4 million for 1995, 1994 and 1993, respectively. The accrual is
based upon the Company's estimates of mileage earned that will eventually be
redeemed for a travel award.
The number of FlightFund travel awards redeemed for round-trip travel for
the years ended December 31, 1995, 1994 and 1993, was approximately 111,000,
109,000 and 99,000, respectively, representing 2.3%, 2.6% and 2.8% of total
revenue passenger miles for each respective period. The Company does not believe
that the usage of free travel awards results in any significant displacement of
revenue passengers due to the Company's ability to manage frequent flyer travel
by use of blackout dates and limited seat availability.
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<PAGE> 57
GOVERNMENT REGULATIONS
NOISE ABATEMENT AND OTHER RESTRICTIONS
The Airport Noise and Capacity Act of 1990 provides, with certain
exceptions, that after December 31, 1999, no person may operate certain large
civilian turbo-jet aircraft in the United States that do not comply with Stage
III noise levels, which is the FAA designation for the quietest commercial jets.
These regulations will require carriers to gradually phase out their noisier
jets, either replacing them with quieter Stage III jets or equipping them with
hush kits to comply with noise abatement regulations, over a five-year period
commencing December 31, 1994. At September 30, 1996, the Company's fleet
consisted of 99 aircraft of which 21 aircraft meet the FAA's Stage II (but not
Stage III) noise reduction requirements and must be retired or significantly
modified prior to the year 2000. Management is currently considering its options
regarding such aircraft.
Numerous airports, including those serving Boston, Denver, Los Angeles,
Minneapolis-St. Paul, New York City, San Diego, San Francisco, San Jose, Orange
County, Washington, D.C., Burbank and Long Beach have imposed restrictions such
as curfews, limits on aircraft noise levels, mandatory flight paths, runway
restrictions and limits on number of average daily departures, which limit the
ability of air carriers to provide service to or increase service at such
airports. In February 1995, the Company obtained approval to increase service at
Orange County's John Wayne Airport, which is a capacity controlled airport, by
five daily flights. The Port Authority of New York and New Jersey is considering
a phaseout of Stage II aircraft on a more accelerated basis than that of the FAA
requirement. The Company's Boeing 757-200s, 737-300s and Airbus A320s all comply
with the current noise abatement requirements of the airports listed above.
FUEL TAX INCREASES
In August 1993, the federal government increased taxes on fuel, including
aircraft fuel, by 4.3 cents per gallon. Initially, commercial aviation fuel was
exempt from this tax; however, the exemption expired on September 30, 1995 and
the Company began paying such tax on October 1, 1995. The expiration of such
exemption increased the Company's annual operating expenses which increase is
expected to be approximately $14.6 million for 1996 based upon the Company's
expected 1996 fuel consumption levels. Debate continues in the Congress as to
whether the exemption from the federal fuel tax previously granted to the
commercial airlines should be reinstated, but there can be no assurance that the
jet fuel tax will be repealed, either temporarily or permanently.
EXCISE TAXES
Effective August 27, 1996, the federal air transportation excise taxes (the
10% domestic tax based on the price of the ticket, the 6.25% air cargo tax based
on freight charges and the $6.00 per passenger international departure tax) were
reinstated. The reinstated federal air transportation excise taxes expire on
December 31, 1996 and it is unclear at this time whether the taxes will be
extended beyond the expiration date.
PASSENGER FACILITY CHARGES
During 1990, Congress enacted legislation to permit airport authorities,
with prior approval from the DOT, to impose passenger facility charges ("PFCs")
as a means of funding local airport projects. These charges, which are intended
to be collected by the airlines from their passengers, are limited to $3.00 per
enplanement, and to no more than $12.00 per round trip. As a result of
competitive pressure, the Company and other airlines have been limited in their
abilities to pass on the cost of the PFCs to passengers through fare increases.
ENVIRONMENTAL MATTERS
The Company is subject to regulation under major environmental laws
administered by federal, state and local agencies, including laws governing air,
water and waste discharge activities. While the Company strives to comply with
environmental laws and regulations, the Company has incurred and may incur costs
to comply with applicable environmental laws including soil and groundwater
cleanup and other related response costs.
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<PAGE> 58
The Company believes, however, that under current environmental laws and
regulations these costs would not have a material adverse effect on the
Company's financial condition.
The Comprehensive Environmental Response Compensation and Liability Act of
1980, also known as Superfund, and comparable state laws impose liability
without regard to fault on certain classes of persons that may have contributed
to the release or threatened release of a "hazardous substance" into the
environment. These persons include the owner or operator of a facility and
persons that disposed or arranged for the disposal of hazardous substances. Many
airports in the United States, including the Phoenix Sky Harbor International
Airport, are the subject of Superfund investigations or state implemented
groundwater investigations. Although the Company occupies facilities at some of
these affected airports, the Company does not believe that its operations have
been included within the ambit of any of these investigations.
The trend in environmental regulation is to place more restrictions and
limitations on activities that may affect the environment, and the Company
expects that the costs of compliance will continue to increase.
AGING AIRCRAFT MAINTENANCE
The FAA issued several Airworthiness Directives ("ADs") in 1990 mandating
changes to the older aircraft maintenance programs. These ADs were issued to
ensure that the oldest portion of the nation's aircraft fleet remains airworthy.
The FAA requires that these aircraft undergo extensive structural modifications.
These modifications are required upon the accumulation of 20 years time in
service, prior to the accumulation of a designated number of flight cycles or
prior to 1994 deadlines established by the various ADs, whichever occurs later.
Five of the Company's 99 aircraft are currently affected by these aging aircraft
ADs and are in compliance with such ADs. The Company constantly monitors its
fleet of aircraft to ensure safety levels which meet or exceed those mandated by
the FAA or the DOT.
FAA FUNDING
Congress recently enacted the FAA Reauthorization Act of 1996, which
established a 21 member National Aviation Civilian Review Commission (the
"Review Commission"). The Review Commission, with the assistance of the DOT,
will conduct an independent study of FAA funding requirements through the year
2002, and develop a cost allocation model for distribution of the cost of using
the United States aviation system to each segment of the system. The Review
Commission will also analyze funding alternatives to the existing excise taxes
(the 10% domestic ticket tax, the 6.25% air cargo tax and the $6.00
international departure tax) which currently fund the FAA and is scheduled to
expire December 31, 1996.
The Company cannot forecast the results of the Review Commission's
activities or what proposals the Review Commission will make. Congress has
indicated an interest in renewing the current excise tax structure for 18 months
beginning January 1, 1997. Implementation of these proposals could significantly
increase the cost of airline operations and could have a material adverse impact
on the Company's operating results.
SAFETY
America West is subject to the jurisdiction of the FAA with respect to
aircraft maintenance and operations, including equipment, dispatch,
communications, training, flight personnel and other matters affecting air
safety. The FAA has the authority to issue new or additional regulations. To
ensure compliance with its regulations, the FAA requires the Company to obtain
operating, airworthiness and other certificates which are subject to suspension
or revocation for cause. In addition, a combination of FAA and Occupational
Safety and Health Administration regulations on both federal and state levels
apply to all of America West's ground-based operations.
SECURITY AND SAFETY MEASURES
The President's Commission on Aviation Safety and Security (the "Aviation
Safety Commission") and the U.S. Congress have recently adopted increased safety
and security measures designed to increase airline passenger security and
protect against terrorist acts, which have resulted in additional operating
costs to the
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airline industry. Examples of immediate increased security measures include
increased passenger profiling, enhanced pre-board screening of passengers and
carry-on baggage, positive bag match for profile selections, continuous physical
bag search at checkpoints, additional airport security personnel, expanded
employment, criminal background and FBI fingerprint checks for selected airport
employees, significantly expanded use of bomb-sniffing dogs, certification of
screening companies and aggressive testing of existing security systems.
The future agenda of the Aviation Safety Commission and related legislative
oversight activities includes feasibility analyses of the deployment and use of
positive bag match systems, enhanced passenger profiling procedures, advanced
cockpit voice and flight data recorders, synthetic vision equipment and advanced
sensors, and the use of new composite materials in aircraft. Such agenda and
activities include consideration of the safety of aging aircraft and other
related issues.
Future decisions which place increased security and safety requirements on
the airline industry could be significant. The Company cannot forecast the
future outcome of the Aviation Safety Commission's deliberations, what
additional security and safety requirements may be imposed in the future or the
costs or revenue impact that would be associated with complying with such
requirements.
SLOT RESTRICTIONS
At New York City's John F. Kennedy Airport and LaGuardia Airport, Chicago's
O'Hare International Airport and Washington's National Airport, which have been
designated "High Density Airports" by the FAA, there are restrictions on the
number of aircraft that may land and take-off during peak hours. In the future,
these take-off and landing time slot restrictions and other restrictions on the
use of various airports and their facilities may result in further curtailment
of services by, and increased operating costs for, individual airlines,
including America West, particularly in light of the increase in the number of
airlines operating at such airports. In general, the FAA rules relating to
allocated slots at the High Density Airports contain provisions requiring the
relinquishment of slots for nonuse and permits carriers, under certain
circumstances, to sell, lease or trade their slots to other carriers. All slots
must be used on 80% of the dates during each two-month reporting period. Failure
to satisfy the 80% use rate will result in loss of the slot. The slot would
revert to the FAA and be reassigned through a lottery arrangement.
The Company currently utilizes two slots at New York City's Kennedy
Airport, four slots at New York City's LaGuardia Airport, four slots at
Chicago's O'Hare International Airport and six slots at Washington's National
Airport. Four of the slots at Washington's National airport are subject to
expiration annually in December. The average utilization rates by the Company of
all the foregoing slots ranged from 86% to 100% in 1995.
CIVIL RESERVE AIR FLEET PROGRAM
In time of war or during a national emergency, U.S. air carriers may be
required to provide airlift services to the Military Airlift Command under the
Civil Reserve Air Fleet Program.
LEGAL PROCEEDINGS
The Company emerged from bankruptcy on August 25, 1994 after operating as a
debtor-in-possession since June 27, 1991, when the Company filed a voluntary
petition to reorganize under Chapter 11 of the Bankruptcy Code. The Bankruptcy
Court confirmed the Company's plan of reorganization (the "Reorganization Plan")
on August 10, 1994. Pursuant to the Reorganization Plan, the previously
outstanding equity interests in the Company were canceled as of the Effective
Date and new stock was issued. In addition, the Company's obligations to certain
prepetition creditors were restructured and general unsecured nonpriority
prepetition creditors received, in full satisfaction of their claims, shares of
Class B Common Stock and cash. The Reorganization Plan also provided for the
disposition of numerous other matters, including the satisfaction of certain
other prepetition claims in accordance with negotiated settlement agreements,
the disposition of various types of claims asserted against the Company, the
adherence to the Company's aircraft lease agreements, the amendment of the
Company's aircraft purchase agreements and the release of the Company's
employees from all obligations arising under the Company's stock purchase plan
in
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consideration for the cancellation of the shares of the stock securing such
obligations. As contemplated by the Reorganization Plan, certain administrative
and priority tax claims remain pending against the Company, which, if ultimately
allowed by the Bankruptcy Court, would represent general obligations of the
Company. Such claims include claims of various state and local tax authorities,
most of which represent ordinary course pre-bankruptcy tax obligations not paid
during the pendency of the bankruptcy proceedings and various other matters. In
connection with the state and local tax claims, the Company has reserved certain
amounts believed by management to be adequate. At September 30, 1996,
approximately 398,000 shares of the Company's Class B Common Stock remained with
an escrow agent pending final resolution of claims in connection with the
bankruptcy. All other securities issued pursuant to the bankruptcy have been
distributed.
In August 1991, the Commission informally requested that the Company
provide the Commission with certain information and documentation underlying
disclosures made by the Company in annual and quarterly reports filed with the
Commission by the Company in 1991. The Company cooperated with the Commission's
informal inquiry. On March 29, 1994, the Company's Board of Directors approved
the submission of an offer of settlement for the purpose of resolving the
inquiry through the entry of a consent decree pursuant to which the Company
would, while neither admitting nor denying any violation of the securities laws,
agree to comply with its future reporting obligations under Section 13 of the
Exchange Act. The Company was advised on May 6, 1994 that the Commission agreed
to accept the Company's offer of settlement. In order to implement the
settlement, on May 12, 1994 the Commission issued an "Order Instituting
Proceedings Pursuant to Section 21C of the Exchange Act and Opinion and Order of
the Commission" (the "Order") finding the Company's Form 10-K for the year
ending December 31, 1990, violated Section 13(a) of the Exchange Act and Rule
13a-1 thereunder, and that the Company's Form 10-Q for the first quarter of 1991
violated Section 13(a) of the Exchange Act and Rule 13a-13 thereunder, and
ordered that the Company cease and desist from violating Section 13(a) of the
Exchange Act and Rules 13a-1 and 13a-13 promulgated under the Exchange Act. The
Order provides that the Company neither admits nor denies any violation of the
securities laws.
An Original Lessee has informed the Company that one of the Owner
Participants may assert a claim in an unspecified amount as a result of the
Internal Revenue Service potentially disallowing investment tax credits and
accelerated depreciation claimed by such Owner Participant in respect of six
aircraft (including three Aircraft). Such a claim, if asserted, would be based
on indemnity agreements between such Original Lessee and such Owner Participant.
Under the terms of the corresponding indemnity agreements between the applicable
Original Lessee and the Company, if such tax benefits were fully or partially
disallowed, the Company's monthly obligation could be increased by up to
approximately $15,000 per aircraft (approximately $1,080,000 per year for all
six aircraft) for the term of the related Leases. The increase applicable to
periods prior to the determination of an indemnity obligation would be payable
monthly over a 24-month period, with interest calculated at a specified prime
rate. The Company is unable to predict whether the Internal Revenue Service will
prevail in matters asserted against the affected Owner Participant and,
consequently, whether the Company will incur any liability in connection with
such claims or the amount of any such liability, if incurred. Based on
information and relevant documents available to the Company, however, management
currently believes that it is unlikely that the disposition of these matters
will have a material adverse effect on the Company's financial condition.
On November 9, 1995, a group of 71 individuals, who are current or former
employees of Continental, commenced a lawsuit against Continental, Air Partners
II, AmWest Partners, AmWest Genpar, Inc. and the Company. The complaint, which
was filed in the Federal District Court for the Western District of Washington,
alleges that the plaintiffs were discharged from their employment as part of a
plan to replace Continental's employees at certain stations with the relatively
younger employees of the Company. The plaintiffs allegedly were discharged from
their employment after Continental and the Company executed agreements under
which the Company provides ground handling services for Continental at certain
locations. The plaintiffs pleaded claims against the Company for conspiracy in
violation of federal equal protection laws and state law claims for wrongful
discharge in violation of public policy, intentional interference with business
expectancy, and intentional and negligent infliction of emotional distress.
These claims, as well as claims for violation of the Federal Age Discrimination
in Employment Act and for violation of various state anti-
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discrimination statutes, also were asserted against the other defendants. The
court has not yet ruled on the certification issue. The plaintiffs seek
reinstatement and damages including back pay, front pay and compensatory,
punitive and liquidated damages, as well as attorneys' fees.
In response to the Company's motion for judgment on the pleadings, the
plaintiffs amended their complaint, dropping the claims of negligent infliction
of emotional distress and wrongful discharge in violation of public policy and
adding the Company as a defendant on the claims under the Age Discrimination in
Employment Act and state anti-discrimination statutes. The Company filed an
answer denying all substantive allegations, and all defendants filed motions for
summary judgment in June 1996. The court granted summary judgment to Continental
and the Company with respect to age discrimination claims brought under the
federal statute by 35 of the 76 plaintiffs who were not 40 at the time of their
termination, granted summary judgment to Continental and the Company on all
claims for intentional infliction of emotional distress, and granted summary
judgment to the Company on the conspiracy claim. Thus, the remaining claims
pending against the Company include (i) federal age discrimination claims
(absent the 35 plaintiffs under 40 years of age); (ii) state age discrimination
claims (it is unclear from the decision whether the court's order allows the 35
plaintiffs under 40 years of age to proceed with these claims); and (iii) an
intentional interference with business relationship claim. On September 30,
1996, the court granted plaintiffs' motion to certify a class with respect to
their claim under the Age Discrimination Act. Discovery proceedings are
currently being conducted and are scheduled to continue through mid-November,
1996. The trial date is scheduled for March 18, 1997.
The Association of Flight Attendants ("AFA"), the union which represents
the Company's flight attendants, filed a complaint on April 29, 1996 in the
Federal District Court for the Northern District of Arizona, alleging that the
Company's failure to pay AWArd Pay to flight attendants violated provisions of
federal labor laws prohibiting discrimination, retaliation or punishing
employees for exercising their statutory right to choose union representation.
The complaint requested that the Company be enjoined from refusing to pay AWArd
Pay to the flight attendants and from taking any action to interfere with,
undermine or subvert the AFA's status as the exclusive bargaining representative
of the flight attendants, damages (presumably payment of AWArd Pay) and punitive
damages in the amount of $250,000. On June 24, 1996, the Company filed a motion
to dismiss the complaint claiming (i) that the AFA's claim is barred by the six
month statute of limitations under federal labor law, (ii) that the complaint
fails to state a claim on which relief can be granted because under federal
labor law the Company would have been entitled to unilaterally change the
compensation program of the flight attendants, and the denial of AWArd Pay does
not rise to the level of extraordinary conduct required for judicial
intervention in the collective bargaining process, and (iii) pursuant to an
agreement between the AFA and the Company, the AFA's claim is to be adjudicated
pursuant to an agreed binding dispute resolution procedure, outside of court.
The court set a hearing on the Company's motion to dismiss for December 9, 1996.
Following the Company's outsourcing of its heavy maintenance, on December
27, 1995 the IBT and five individuals commenced a lawsuit against the Company in
the Federal District Court for the Northern District of Arizona. The complaint
alleged that the individual plaintiffs were terminated because they were IBT
committee members or open supporters of the union and that the Company
wrongfully terminated approximately 378 members of the mechanics and related
craft or class in connection with the outsourcing in violation of federal labor
laws. The plaintiffs requested that the litigation be certified as a class
action, asked for a judgment that the Company violated federal labor laws, and
sought reinstatement for the individual plaintiffs, compensatory damages for all
plaintiffs and punitive damages for the IBT. On January 16, 1996, the Company
filed a motion to dismiss the claims of the IBT (because it was not the
certified representative of the mechanics at the time of the alleged wrongdoing,
the IBT could not assert a claim under the federal labor laws) and four of the
individual plaintiffs (because each had signed a release agreement) and an
answer in respect of the claims of the fifth individual plaintiff. On September
4, 1996, the court issued an order dismissing the claims of the four discharged
mechanics who had signed release agreements; the court also ruled that the class
action allegations in the complaint were rendered moot with respect to other
discharged mechanics who had signed releases. In addition, the court held that
the IBT did not have standing in its own behalf to pursue a claim under the
Railway Labor Act because the outsourcing of heavy maintenance and termination
of the mechanics took place before the IBT received its certification from the
National Mediation
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Board to represent the Company's mechanics, and that the IBT could not pursue
any claims for monetary damages on behalf of any individual mechanics. Finally,
the court ruled that the IBT could attempt to file an amended complaint
asserting non-damages claims on behalf of current mechanics and discharged
mechanics who had not signed release agreements. On November 6, 1996, the IBT
and the four individual plaintiff's whose claims were dismissed filed a motion
for certification under Rule 54(b) of the Federal Rules of Civil Procedure,
seeking the right to appeal the Court's order dismissing them from the case. The
Company intends to oppose that motion.
On September 16, 1996, the IBT filed a second supplemental amended
complaint seeking to assert claims under the Railway Labor Act on behalf of the
current mechanics and the discharged mechanics who did not sign releases. The
main relief requested by the IBT is an injunction requiring the Company to
discontinue the subcontracting of heavy maintenance, and an order of
reinstatement for the discharged mechanics who did not release their claims. The
fifth individual plaintiff who did not sign a release asserted an Arizona
wrongful discharge claim and sought punitive damages. On October 4, 1996, the
Company filed a motion to dismiss plaintiffs' second supplemental amended
complaint on the grounds that the IBT does not have standing to pursue claims on
behalf of current mechanics, or former mechanics who did not sign releases, and
that the individual failed to state a claim for wrongful discharge under Arizona
law, and that, in any event, his claim was preempted by the Railway Labor Act.
The court has scheduled a hearing on the Company's motion to dismiss for January
13, 1997.
On April 18, 1996, immediately following the vote tally on the IBT's
application to represent the Company's mechanics and related, the Company filed
a complaint in the Federal District Court of the Northern District of Arizona,
alleging that the decision by the NMB to allow the workers who were terminated
as the result of the Company's outsourcing of heavy maintenance to vote violated
federal labor laws and seeking a ruling that the certification by the NMB of the
IBT as the collective bargaining representative of the Company's mechanics and
related be declared invalid. The Company's complaint also alleged that the IBT
violated federal labor laws by filing a meritless lawsuit, challenging the
outsourcing and reduction in force (see above), for the sole purpose of enabling
the discharged mechanics to vote in the representation election. On the next
day, the Company filed a motion for a preliminary injunction declaring that the
Company had no obligation to recognize the IBT as that collective bargaining
representative or to negotiate with the IBT. On May 2, 1996, the NMB filed a
motion seeking to dismiss the lawsuit or, alternatively, requesting that the
court grant summary judgment in favor of the NMB, arguing that the NMB has
exclusive jurisdiction over elections and the determination of collective
bargaining representatives. On May 10, 1996, the IBT filed an answer, including
counterclaims alleging that the Company's refusal to meet and bargain with the
IBT violated federal labor laws. On May 31, 1996, the IBT filed a motion for a
preliminary injunction requesting that the court order the Company to commence
bargaining with the IBT. On September 3, 1996, the court issued an order
granting the NMB's motion to dismiss, denying the Company's motion for
preliminary injunction and granting the IBT's request for preliminary relief on
its counterclaims.
On September 24, 1996, the Company filed a motion seeking certification of
the court's order dismissing the NMB and seeking a stay of the court's order
granting preliminary relief to the IBT pending the Company's appeal of that
order. In an order filed October 30, 1996, the court granted the Company's
motion for certification, and denied the Company's motion for stay of the
preliminary injunction. On October 31, 1996, the Company filed its notice of
appeal in the district court regarding both the court's dismissal of the
Company's claims against the NMB and the grant of the preliminary injunction in
favor of the IBT.
On October 11, 1996, the IBT filed a motion to consolidate this case with
the lawsuit filed by the IBT in December 1995, as described above, on behalf of
discharged Company mechanics. The Company filed an opposition on October 28,
1996. To date, there has been no ruling from the Court.
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HOLDING COMPANY STRUCTURE
Effective on or about December 31, 1996, the Company intends to reorganize
its corporate structure by the formation of a holding company organized under
Delaware law, to be named America West Holdings Corporation ("Holdings"). As the
result of that reorganization, the Company will become a wholly owned subsidiary
of Holdings. Holdings' Class B Common Stock will be listed on the New York Stock
Exchange. Holdings will not have any obligations with respect to any of the
Leases or the other documents relating to the Leases, the Equipment Notes or the
Certificates.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to the executive officers and directors of the
Company is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ------------------------------- --- --------------------------------------------------------------
<S> <C> <C>
William A. Franke.............. 59 Chairman of the Board, President and Chief Executive Officer
Richard R. Goodmanson.......... 49 Director, Executive Vice President and Chief Operating Officer
Julia Chang Bloch.............. 54 Director
Stephen F. Bollenbach.......... 54 Director
Frederick W. Bradley, Jr. ..... 69 Director
James G. Coulter............... 36 Director
John F. Fraser................. 66 Director
John L. Goolsby................ 54 Director
Richard C. Kraemer............. 53 Director
John R. Power, Jr.............. 40 Director
Larry L. Risley................ 52 Director
Frank B. Ryan.................. 60 Director
Richard P. Schifter............ 43 Director
John F. Tierney................ 51 Director
Raymond S. Troubh.............. 70 Director
Ronald A. Aramini.............. 51 Senior Vice President -- Operations
John R. Garel.................. 38 Senior Vice President -- Marketing and Sales
Stephen L. Johnson............. 40 Senior Vice President -- Legal Affairs
W. Douglas Parker.............. 35 Senior Vice President and Chief Financial Officer
Michael A. Vescuso............. 51 Senior Vice President -- Human Resources
Michael R. Carreon............. 43 Vice President and Controller
C. A. Howlett.................. 53 Vice President -- Public Affairs
</TABLE>
DIRECTORS OF THE COMPANY
Set forth below is information regarding the Company's directors:
WILLIAM A. FRANKE. Chairman of the Board and Chief Executive Officer --
(Executive Committee). Mr. Franke was named Chairman of the Board of Directors
in September 1992. On January 1, 1994, Mr. Franke was also elected to serve as
the Company's Chief Executive Officer and on May 23, 1996, he was elected
President. In addition to his responsibilities at America West, Mr. Franke
serves as president of Franke & Company, Inc., a financial services company he
has owned since May 1987. From November 1989 until June 1990, Mr. Franke served
as the Chairman of Circle K Corporation's executive committee with the
responsibility for Circle K Corporation's restructuring. In May 1990, the Circle
K Corporation filed a voluntary petition to reorganize under Chapter 11 of the
Bankruptcy Code. From June 1990 until August 1993, Mr. Franke served as the
chairman of a special committee of directors overseeing the reorganization of
the Circle K Corporation. From 1990 until 1993, Mr. Franke also served in
various other capacities at Circle K Corporation. Mr. Franke was also involved
in the restructuring of the Valley National Bank of Arizona (now Bank One of
Arizona). Mr. Franke serves as a director of Phelps Dodge Corp., Central
Newspapers Inc. and the Air Transport Association of America and as a Director
and chairman of the board of Airplanes Limited and a controlling trustee and
chairman of Airplanes U.S. Trust, entities formed to acquire indirectly certain
aircraft from GPA.
RICHARD R. GOODMANSON. Director, Executive Vice President and Chief
Operating Officer. Mr. Goodmanson joined the Company in June 1996 and became a
member of America West's Board of Directors effective on October 15, 1996. Prior
to joining the Company, he served for four years as Senior Vice
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President of Operations at Frito-Lay, Inc. Before that, Mr. Goodmanson served as
a principal at the consulting firm of McKinsey and Company, Inc.
JULIA CHANG BLOCH. Ms. Bloch has been a member of America West's Board of
Directors since August 26, 1994. From June 1993 to June 1996, she served as the
group executive vice president, corporate relations of Bank of America
Corporation. She is currently the president of the U.S. Japan Foundation. Ms.
Bloch served as the U.S. Ambassador to Nepal from September 1989 through May
1993. Ms. Bloch is a board member of the American Refugee Committee and the
Himalaya Foundation and serves as a trustee of the Asian Art Museum Foundation
and the Asia Society.
STEPHEN F. BOLLENBACH. (Compensation Committee.) Mr. Bollenbach has been a
member of America West's Board of Directors since August 26, 1994. He has been
chief executive officer and a director of Hilton Hotels Corporation since
February 1996. He served as senior executive vice president and chief financial
officer of The Walt Disney Company from May 1995 to February 1996. Prior to May
1995, he was president and chief executive officer of Host Marriott Corp. He
served as executive vice president and chief financial officer of The Marriott
Corporation from 1992 until 1993. Mr. Bollenbach served as chief financial
officer of the Promus Companies from 1986 to 1990 and served as chief financial
officer for the Trump Organization from 1990 to 1992.
FREDERICK W. BRADLEY, JR. (Compensation Committee, Executive Committee.)
Mr. Bradley has been a member of America West's Board of Directors since
September 1992. Immediately prior to joining the Board of Directors, Mr. Bradley
was a senior advisor with Simat, Helliesen & Eichner, Inc. Mr. Bradley formerly
was a senior vice president of Citibank/Citicorp's Global Airline and Aerospace
business. Mr. Bradley joined Citibank/Citicorp in 1958. In addition, Mr. Bradley
is a member of the board of directors of Shuttle, Inc. (USAir Shuttle) and the
Institute of Air Transport, Paris, France. Mr. Bradley also is chairman of the
board of directors of Aircraft Lease Portfolio Securitization 92-1 Ltd. and
Aircraft Lease Portfolio Securitization 94-1 Ltd.
JAMES G. COULTER. (Executive Committee.) Mr. Coulter has been a member of
America West's Board of Directors since August 26, 1994. Since 1992, Mr. Coulter
has been a managing director of Texas Pacific Group, an investment firm. From
1986 to August 1992, Mr. Coulter was vice president of Keystone, Inc. (formerly
Robert M. Bass Group, Inc.), a private investment firm based in Fort Worth,
Texas. From April 1993 until he became a member of the Company's Board, Mr.
Coulter was a member of the board of directors of Continental. Mr. Coulter also
serves as a director of American Savings Bank and Allied Waste Industries, Inc.
JOHN F. FRASER. Mr. Fraser has been a member of America West's Board of
Directors since August 26, 1994. Mr. Fraser currently serves as vice chairman of
Russel Metals, Inc. (formerly Federal Industries Ltd.), and has served in such
position since May 1995. Mr. Fraser joined Federal Industries Ltd. as president
and chief executive officer in 1978 and was elected chairman of the board in May
1992. Mr. Fraser is a director and chairman of the board of Air Canada, and a
director of Bank of Montreal, Centra Gas Manitoba Inc., Coca-Cola Beverages
Ltd., Inter-City Products Corporation, Shell Canada Limited and The Thomson
Corporation.
JOHN L. GOOLSBY. (Audit Committee.) Mr. Goolsby has been a member of
America West's Board of Directors since August 26, 1994. He is the president and
chief executive officer of The Hughes Corporation and The Howard Hughes
Corporation (formerly named the Summa Corporation), an entity engaged in the
development and management of office and industrial buildings and large scale
land development in Nevada and Southern California. In addition, Mr. Goolsby
serves as a director of Nevada Power Company and Bank of America Nevada. He also
serves as a trustee of The Donald W. Reynolds Foundation.
RICHARD C. KRAEMER. (Compensation Committee.) Mr. Kraemer has been a
member of America West's Board of Directors since September 1992. He served as
chief executive officer and president of UDC Homes, Inc. ("UDC "), a
Phoenix-based homebuilding company, from October 1994 until March 1996. Mr.
Kraemer was President and Chief Operating Officer of UDC from 1985 until October
1994. He was also a director of UDC from 1980 until March 1996. UDC filed for
protection under Chapter 11 of the
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Bankruptcy Code in May 1995. The plan for the reorganization of UDC was
confirmed by the bankruptcy court on October 3, 1995 and consummated on November
14, 1995.
JOHN R. POWER, JR. (Executive Committee.) Mr. Power has been a member of
America West's Board of Directors since August 26, 1994. He is president of The
Patrician Corporation, an investment company. Prior to joining The Patrician
Corporation, Mr. Power served as senior manager at Continental Bank. Mr. Power
also serves as a director of MRS Services and a subsidiary of J.I. Case
Corporation.
LARRY L. RISLEY. (Audit Committee.) Mr. Risley has been a member of
America West's Board of Directors since August 26, 1994. He has been the chief
executive officer and chairman of the board of directors of Mesa since the
founding of the company in 1983. From 1979 to 1982, Mr. Risley was president of
Mesa Aviation Services, Inc.
FRANK B. RYAN. (Audit Committee.) Dr. Ryan has been a member of America
West's Board of Directors since March 17, 1995. Since August 1990, Dr. Ryan has
been a professor of mathematics and of computational and applied mathematics,
and was formerly the vice president of external affairs, of Rice University.
From 1988 to 1990, Dr. Ryan served as president and chief executive officer of
Contex Electronics, Inc., an electronic component manufacturing company. Dr.
Ryan serves on the board of directors of Danielson Holding Corporation and
Sequoia Systems, Inc. and as a governor advisor to Rice University.
RICHARD P. SCHIFTER. (Compensation Committee.) Mr. Schifter has been a
member of America West's Board of Directors since August 26, 1994. He has been a
managing director of Texas Pacific Group, an investment firm, since July 1994.
Mr. Schifter serves of counsel to the Washington D.C. based law firm of Arnold &
Porter, where he was an associate from 1979 to 1986 and a partner from 1986 to
July 1994. Mr. Schifter serves on the board of directors of Favorite Brands,
Inc.
JOHN F. TIERNEY. Mr. Tierney has served as a member of America West's
Board of Directors since December 1993. Mr. Tierney is the assistant chief
executive and finance director of GPA and has served in such capacity since
1993. From 1981 to 1993, he served as chief financial officer of GPA.
RAYMOND S. TROUBH. (Audit Committee.) Mr. Troubh has been a member of
America West's Board of Directors since August 26, 1994. He is a financial
consultant and currently serves on the board of directors of ADT Limited,
Applied Power Inc., ARIAD Pharmaceuticals, Inc., Becton, Dickinson and Company,
Diamond Offshore Drilling, Inc., Foundation Health Corporation, General American
Investors Company, Olsten Corporation, Petrie Stores Corporation, Time Warner
Inc., Triarc Companies, Inc. and WHX Corporation.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information regarding the executive officers of the
Company other than Mr. Franke and Mr. Goodmanson, who are described above.
RONALD A. ARAMINI. Senior Vice President -- Operations. Mr. Aramini joined
the Company in September 1996. From October 1993 until September 1996, Mr.
Aramini served as President and Chief Executive Officer of Allegheny Airlines, a
Pennsylvania-based regional airline subsidiary of US Air Group, Inc. Before
that, he served for three years at Air Wisconsin, including in positions as Vice
President -- Operations, Senior Vice President -- Operations, and President and
Chief Executive Officer. Prior to his position at Air Wisconsin, Mr. Aramini
served in various positions at Continental Airlines.
JOHN R. GAREL. Senior Vice President -- Marketing and Sales. Mr. Garel
joined the Company in April 1995. From 1993 until early 1995, Mr. Garel was the
Chief Executive Officer of Cadmus Journal Services, a division of Cadmus
Communications located in Baltimore. Prior to that, Mr. Garel was with Northwest
Airlines, serving from 1990 to 1992 as Vice President, Financial Planning and
Analysis and, thereafter, as Vice President, Market Development and Area
Marketing. Prior to that, Mr. Garel worked for American Airlines in several
management capacities.
STEPHEN L. JOHNSON. Senior Vice President -- Legal Affairs. Mr. Johnson
joined the Company in February 1995. From 1993 to 1994, Mr. Johnson served as
Senior Vice President and General Counsel
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to GE Capital Aviation Services Limited in Shannon, Ireland. From 1989 to 1993
Mr. Johnson was employed by GPA, also in Shannon, from 1989 to 1991 as Vice
President and Senior Counsel and from 1991 to 1993 as Senior Vice President and
General Counsel to GPA's Leasing Division. Prior to joining GPA, Mr. Johnson was
engaged in the private practice of law.
W. DOUGLAS PARKER. Senior Vice President and Chief Financial Officer. Mr.
Parker joined the Company in June 1995. From 1991 through June of 1995, he
worked in various capacities at Northwest Airlines, including positions as Vice
President -- Assistant Treasurer and Vice President -- Financial Planning and
Analysis. Prior to his employment at Northwest, Mr. Parker served in various
positions at American Airlines.
MICHAEL A. VESCUSO. Senior Vice President -- Human Resources. Mr. Vescuso
joined the Company in September 1994. Prior to such time, Mr. Vescuso worked as
an organizational and management development consultant. From 1990 to 1992 he
was the Director, Organization and Development of Frito-Lay, Inc. From 1978 to
1990, he held several senior management positions at HBJ, Inc., including the
position of human resources officer.
MICHAEL R. CARREON. Vice President and Controller. Mr. Carreon joined the
Company in December 1994 as Senior Director -- Corporate Audit. On January 1,
1996, he was appointed Vice President and Controller. From 1986 to 1994, Mr.
Carreon held accounting and audit-related management positions at United
Airlines. Prior to that, he served for five years in the Audit Services Practice
of Arthur Andersen & Co. in Chicago.
C. A. HOWLETT. Vice President -- Public Affairs. Mr. Howlett joined the
Company in January 1995. Prior to such time, Mr. Howlett maintained a government
relations practice as a principal at the law firm of Lewis and Roca in Phoenix.
Mr. Howlett's prior work experience has included senior positions with Salt
River Project, the City of Phoenix and The White House where he served as
special assistant to President Ronald Reagan for intergovernmental affairs.
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CERTAIN TRANSACTIONS
The Company has certain alliance agreements with Continental and Mesa. See
"Business -- Operations". Pursuant to a codesharing agreement with Mesa entered
into in December 1992 (which was prior to Mesa becoming a significant
stockholder), the Company assesses a per passenger charge for facilities,
reservations and other services from Mesa for enplanements on the Mesa system.
Such payments by Mesa to the Company totalled approximately $2.9 million for
1995. The Company entered into several agreements in 1994 and 1995 with
Continental relating to codesharing arrangements and ground handling operations.
The Company paid Continental approximately $14 million and received
approximately $11 million from Continental in 1995 for such services.
On October 14, 1994, the Company issued $13 million of its 11 1/4% Senior
Unsecured Notes due 2001 ("11 1/4% Notes") to Fidelity Management Trust Company
and certain of its affiliates ("Fidelity") and $10 million of such notes to
Lehman Brothers, Inc. ("Lehman") in satisfaction of certain claims and other
prepetition obligations totalling approximately $25 million held by Fidelity and
Lehman. Fidelity and Lehman are stockholders of the Company. See "Underwriting".
In connection with the issuance of such notes, Fidelity and Lehman also received
cash payments of $2.1 million and $1.3 million, respectively, representing the
portion of claims and other prepetition obligations not satisfied by the
issuance of the notes and other payments made in connection with the settlement
of such claims. In addition, Fidelity held an additional $100 million principal
amount of the 11 1/4% Notes. In August 1995, the Company prepaid $48 million
principal amount of the 11 1/4% Notes and exchanged the remaining $75 million
principal amount of such notes, held solely by Fidelity, for $75 million of the
Company's 10 3/4% Senior Unsecured Notes due 2005 (the "10 3/4% Notes"). In
connection with such transaction, Fidelity was paid a fee equal to 3 5/8% of the
principal amount of the new notes ($2,718,750). In the second quarter of 1996,
the Company prepaid $25 million of the 10 3/4% Notes.
In 1994 and 1995, the Company loaned Mr. Franke $470,282 and $203,136,
respectively, for the purpose of enabling him to pay income taxes attributable
to certain grants of Class B Common Stock made to Mr. Franke in 1994. In January
1996, the Company loaned Mr. Franke an additional $40,000 in connection with
such grants. The loans are each payable in two equal installments on September
26, 2000 and September 26, 2001. The 1994 loan bears interest (payable
semi-annually) at the rate of 8% per annum (11% per annum after maturity) and
the 1995 and 1996 loans bear interest at the rate of 6.02% per annum (10% per
annum after maturity). The loans are secured by a portion of the shares granted
to Mr. Franke, but are otherwise non-recourse to Mr. Franke.
In May 1996, the Company purchased Warrants to purchase 802,860 and
1,384,615 shares of the Company's Class B Common Stock from Continental and GPA,
respectively, for $6,531,266 and $11,609,997, respectively.
At September 30, 1996, the Company had leased one B737-300 aircraft and
three A320-200 aircraft, and was obligated to lease four additional aircraft
prior to June 30, 1999 under the GPA Put Agreement. Under the agreement, new or
used B737-300, B757-200, or new or "like new" A320-200 aircraft may be put to
the Company at a rate of no more than one aircraft in 1996 and three aircraft
per year thereafter. In addition, for every new A320 aircraft put to the
Company, the Company has the right to reduce deliveries under the AVSA A320
purchase contract on a one-for-one basis. In connection with the transactions
described in this Prospectus, the GPA Put Agreement will be terminated pursuant
to the GPA Put Termination Agreement and, as a result, GPA's right under the GPA
Put Agreement to put aircraft to the Company and the Company's obligation to
accept and lease such aircraft under the GPA Put Agreement will be terminated.
Pursuant to the GPA Put Termination Agreement, America West will be
obligated to pay the Original Lessees, over the life of the Leases, certain
amounts generally equal in the aggregate to (x) the amounts which the Company
would have been required to pay as monthly lease payments under the subleases
between the Company and the applicable Original Lessees with respect to the
Equipment (the "Prior Subleases", which will be terminated in connection with
the Company entering into the Leases) minus (y) the amount which the Company is
required to pay as Basic Rent under the Leases minus (z) an amount which results
in a rent savings to the Company, under the Leases as compared to the Prior
Subleases, of approximately
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$8 million. With respect to a particular item of Equipment, an amount, generally
equal to the portion of the amount described in the preceding sentence to be
paid with respect to such item of Equipment discounted to present value, must be
paid in connection with an Event of Loss (as defined herein) with respect
thereto (as described under "Description of the Equipment Notes -- The
Leases -- Events of Loss").
Pursuant to the GPA Put Termination Agreement and subject to a number of
conditions specified therein, GPA will be obligated to indemnify and reimburse
America West for certain of its costs and expenses (including certain of those
arising from indemnification obligations of the Company) incurred in connection
with the transactions contemplated by this Prospectus. In addition, GPA has
agreed to indemnify the Company against certain liabilities arising under
applicable securities laws with respect to certain information in this
Prospectus, and the Company has agreed to indemnify GPA against certain
liabilities arising under applicable securities laws with respect to certain
other information in this Prospectus.
After the consummation of the transactions described in this Prospectus,
the Company will continue to sublease eight of its A320-200 aircraft from the
Original Lessees.
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DESCRIPTION OF THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to five separate
Trust Supplements to be entered into between America West and the Trustee
pursuant to the terms of the Basic Agreement. The following summary describes
certain terms of the Certificates, the Basic Agreement and the Trust
Supplements, forms of which have been filed as exhibits to the Registration
Statement. In addition, forms of the Basic Agreement and each Trust Supplement
will be filed by America West with the Commission as exhibits to a Current
Report on Form 8-K. The statements under this caption are a summary and do not
purport to be complete. The summary makes use of terms defined in, and is
qualified in its entirety by reference to, all of the provisions of the Basic
Agreement and the Trust Supplements. Except as otherwise indicated, the
following summary relates to each of the Trusts and the Certificates issued by
each Trust. The terms and conditions governing each of the Trusts will be
substantially the same, except as described under "-- Subordination" below and
except that the principal amount, the interest rate, scheduled repayments of
principal and maturity date applicable to the Equipment Notes held by each Trust
and the Final Expected Distribution Date applicable to each Trust will differ.
Section references in parentheses are to the relevant sections of the Basic
Agreement, unless otherwise indicated.
GENERAL
The Certificates of each Trust will be issued in fully registered form only
and will be subject to the provisions described below under "-- Delivery and
Form; Book-Entry". (Section 3.01) Each Certificate will represent a fractional
undivided interest in the Trust created by the Pass Through Trust Agreement
pursuant to which such Certificate is issued. (Section 2.01) The Trust Property
will consist of (i) the Equipment Notes held in 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 the Intercreditor Agreement (including all monies
receivable in respect of such rights), (iii) except for the Class D and Class E
Trusts, all monies receivable under the Liquidity Facility for such Trust and
(iv) funds from time to time deposited with the Trustee in accounts relating to
such Trust. (Section 1.01) Certificates will represent pro rata shares of the
Equipment Notes and other property held in the related Trust and will be issued
in denominations of $1,000 and integral multiples thereof, except that one
Certificate issued by each Trust may be issued in a different denomination.
(Sections 2.01 and 3.01)
The Certificates represent interests in the respective Trusts and all
payments and distributions there will be made only from the Trust Property of
the related Trust. (Section 3.08) The Certificates do not represent an interest
in or obligation of America West, any Trustee, Indenture Trustee, Owner Trustee,
Owner Participant, or any affiliate of any thereof. Each Certificateholder by
its acceptance of a Certificate agrees to look solely to the income and proceeds
from the Trust Property of the related Trust as provided in the Pass Through
Trust Agreements.
The Equipment Notes issued under an Indenture may be held in more than one
Trust and one Trust may hold Equipment Notes issued under more than one
Indenture.
SUBORDINATION
Pursuant to the Intercreditor Agreement to which the Trustees, the
Subordination Agent and the Liquidity Provider will be parties, on each
Distribution Date, so long as no Triggering Event shall have occurred (whether
or not continuing), all payments received by the Subordination Agent in respect
of the Equipment Notes and certain other payments will be distributed in the
following order: (a) payment of the Liquidity Obligations to the Liquidity
Provider and, if applicable to replenish Cash Collateral Accounts up to their
respective Required Amounts; (b) payment of Expected Distributions to the
holders of Class A Certificates; (c) payment of Expected Distributions to the
holders of Class B Certificates; (d) payment of Expected Distributions to the
holders of Class C Certificates; (e) payment of Expected Distributions to the
holders of Class D Certificates; (f) payment of Expected Distributions to the
holders of the Class E Certificates; and (g) payment of certain fees and
expenses of the Subordination Agent and each Trustee.
Upon the occurrence of a Triggering Event and at all times thereafter, all
payments received by the Subordination Agent in respect of the Equipment Notes
and certain other payments will be distributed in the
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<PAGE> 71
following order: (a) to reimburse the Subordination Agent, each Trustee, the
Liquidity Provider, and any Certificateholder, as the case may be, for the
payment of Administration Expenses; (b) to the Liquidity Provider in payment of
Liquidity Obligations and, so long as no Performing Note Deficiency exists and
no Liquidity Event of Default has occurred and is continuing, to replenish Cash
Collateral Accounts up to their respective Required Amounts; (c) to reimburse
the Subordination Agent, each Trustee and each Certificateholder, as the case
may be, for the payment of Certain Taxes and Fees; (d) to pay Adjusted Expected
Distributions to the holders of Class A Certificates; (e) to pay Adjusted
Expected Distributions to the holders of Class B Certificates; (f) to pay
Adjusted Expected Distributions to the holders of Class C Certificates; (g) to
pay Adjusted Expected Distributions to the holders of Class D Certificates; and
(h) to pay Adjusted Expected Distributions to the holders of Class E
Certificates.
The priority of distributions after a Triggering Event will have the effect
in certain circumstances of distributing payments received in respect of one or
more junior series of Equipment Notes to more senior Classes of Certificates. If
this should occur, the interest accruing on the remaining Equipment Notes would
be less than the interest accruing on the remaining Certificates because the
Certificates would have a greater proportion of high interest rate junior
Classes of Certificates. As a result of such possible interest shortfalls, the
holders of one or more junior Classes of Certificates may not receive the full
amount due them after a Triggering Event even if all the Equipment Notes are
eventually paid in full.
PAYMENTS AND DISTRIBUTIONS
Payments of principal, Make-Whole Amount (if any) and interest with respect
to the Equipment Notes or other Trust Property held in each Trust will be
distributed by the Trustee to Certificateholders of such Trust on the date
receipt of such payment is confirmed except in the case of certain types of
Special Payments.
The Equipment Notes held in each Trust will accrue interest at the
applicable rate per annum for the Certificates issued by such Trust as set forth
on the cover page of this Prospectus, payable on January 2 and July 2 of each
year, commencing January 2, 1997, and such interest payments will be passed
through to Certificateholders of such Trust on each such date until the final
Distribution Date for such Trust, in each case subject to the Intercreditor
Agreement. Interest is calculated on the basis of a 360-day year consisting of
twelve 30-day months. Payments of interest on the Certificates to be issued by
each Trust (other than the Class D and the Class E Trusts) will be supported by
a separate Liquidity Facility to be provided by the Liquidity Provider for the
benefit of the holders of such Certificates in an amount sufficient to pay
interest thereon at the Stated Interest Rate for such Trust on three successive
Regular Distribution Dates. Notwithstanding the subordination provisions of the
Intercreditor Agreement, the Liquidity Facility for any Class of Certificates
does not provide for drawings thereunder to pay principal of or interest or
Make-Whole Amount on the Certificates of any other Class. Therefore, only the
holders of the Certificates to be issued by a particular Trust will be entitled
to receive and retain the proceeds of drawings under the Liquidity Facility for
such Trust. There is no Liquidity Facility for the Class D and Class E Trusts.
See "Description of the Liquidity Facilities".
Payments of principal on the Equipment Notes held in each Trust are
scheduled to be received by the Trustee on January 2 or July 2 or both, in
certain years depending upon the terms of the Equipment Notes held in such
Trust, commencing January 2, 1997, in accordance with the principal repayment
schedule set forth herein in each case subject to the Intercreditor Agreement.
Scheduled payments of interest and principal on the Equipment Notes are herein
referred to as "Scheduled Payments", and January 2 and July 2 of each year are
herein referred to as "Regular Distribution Dates". See "Description of the
Equipment Notes -- Principal and Interest Payments". The Final Expected
Distribution Date for each Class of Certificates is set forth on the cover page
of this Prospectus.
The Trustee of each Trust will distribute, subject to the Intercreditor
Agreement, on each Regular Distribution Date to the Certificateholders of such
Trust all Scheduled Payments, the receipt of which is confirmed by the Trustee
on such Regular Distribution Date. Each Certificateholder of each Trust will be
entitled to receive a pro rata share of any distribution in respect of Scheduled
Payments made on the Equipment Notes held in such Trust. Each such distribution
of Scheduled Payments will be made by the
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<PAGE> 72
Trustee of each Trust to the Certificateholders of record of such Trust on the
Record Date applicable to such Scheduled Payment subject to certain exceptions.
(Section 4.02) If a Scheduled Payment is not received by the Trustee on a
Regular Distribution Date but is received within five days thereafter, it will
be distributed to such holders of record on the date received. If it is received
after such five-day period, it will be treated as a Special Payment (as defined
below) and distributed as described below, except that payments received by the
Trustee following default in respect of the Equipment Notes on a Regular
Distribution Date as a result of a drawing under the Liquidity Facility shall be
distributed on such Regular Distribution Date.
Any payment in respect of, or any proceeds of, any Equipment Note or the
Trust Indenture Estate under (and as defined in) each Indenture (other than a
Scheduled Payment) (each, a "Special Payment") will be scheduled to be
distributed to the Certificateholders on the first business day which follows
the later to occur of (x) the 22nd day after the date the Trustees receive
written notice from the Subordination Agent of such Special Payment or (y) the
date the Subordination Agent receives or expects to receive such Special Payment
(the "Special Distribution Date"). (Intercreditor Agreement, Section 2.4(a))
Each Trustee will mail notice to the Certificateholders of the applicable Trust
stating the scheduled Special Distribution Date, the related Record Date, the
amount of such Special Payment, and the reason for the Special Payment. In the
case of a redemption or purchase of the Equipment Notes held in the related
Trust, such notice will be mailed not less than 20 days prior to the date such
Special Payment is scheduled to be distributed, and in the case of any other
Special Payment, such notice will be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment.
(Section 4.02(c)) Each distribution of a Special Payment, other than a final
distribution, on a Distribution Date for any Trust will be made by the Trustee
to the Certificateholders of record of such Trust on the Record Date applicable
to such Special Payment. (Section 4.02(b)) See "-- Indenture Events of Default
and Certain Rights Upon an Indenture Event of Default" and "Description of the
Equipment Notes -- Redemption".
Each Pass Through Trust Agreement requires that the Trustee establish and
maintain, for the related Trust and for the benefit of the Certificateholders of
such Trust, one or more accounts (the "Certificate Account") for the deposit of
payments representing Scheduled Payments on the Equipment Notes held in such
Trust. Each Pass Through Trust Agreement also requires that the Trustee
establish and maintain, for the related Trust and for the benefit of the
Certificateholders of such Trust, one or more accounts (the "Special Payments
Account") for the deposit of payments representing Special Payments, which
account shall be non-interest bearing except in certain circumstances where the
Trustee may invest amounts in such account in certain permitted investments.
Pursuant to the terms of each Pass Through Trust Agreement, the Trustee is
required to deposit any Scheduled Payments relating to the applicable Trust
received by it in the Certificate Account of such Trust and to deposit any
Special Payments so received by it in the Special Payments Account of such
Trust. (Section 4.01) All amounts so deposited will be distributed by the
Trustee on a Regular Distribution Date or a Special Distribution Date, as
appropriate. (Section 4.02)
Distributions by the Trustee from the Certificate Account or the Special
Payments Account of each Trust on a Regular Distribution Date or a Special
Distribution Date in respect of Certificates issued by such Trust in definitive
form will be made to each Certificateholder of record of such Certificates on
the applicable Record Date. (Section 4.02) The final distribution for each
Trust, however, will be made only upon presentation and surrender of the
Certificates for such Trust at the office or agency of the Trustee specified in
the notice given by the Trustee of such final distribution. The Trustee will
mail such notice of the final distribution to the Certificateholders of such
Trust, specifying the date set for such final distribution and the amount of
such distribution. (Section 11.01) See "-- Termination of the Trusts".
Distributions in respect of Certificates issued in global form will be made as
described in "-- Delivery and Form; Book-Entry" below.
If any Regular Distribution Date or Special Distribution Date is not a
business day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date will be made on the next succeeding business
day without additional interest.
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<PAGE> 73
POOL FACTORS
Unless there has been a redemption, purchase or a default in the payment of
principal or interest in respect of one or more issues of the Equipment Notes
held in a Trust, as described in "-- Indenture Events of Default and Certain
Rights Upon an Indenture Event of Default" and "Description of the Equipment
Notes Redemption", the Pool Factor with respect to each Trust will decline in
proportion to the scheduled repayments of principal on the Equipment Notes held
in such Trust as described below in "Description of the Equipment Notes --
General". In the event of such redemption, purchase or default, the Pool Factor
and the Pool Balance of each Trust so affected will be recomputed after giving
effect thereto and notice thereof will be mailed to the Certificateholders of
such Trust. Each Trust will have a separate Pool Factor.
The "Pool Balance" for each Trust or for the Certificates issued by any
Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all payments made in
respect of the Certificates of such Trust other than payments made in respect of
interest or Make-Whole Amount thereon or reimbursement of any costs and expenses
in connection therewith. The Pool Balance for each Trust or for the Certificates
issued by any Trust as of any Regular Distribution Date or Special 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 such Trust and the
distribution thereof to be made on that date. (Section 1.01)
The "Pool Factor" for each Trust as of any Regular Distribution Date or
Special Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance of such Trust as of such date by (ii)
the original aggregate face amount of the Certificates of such Trust. The Pool
Factor for each Trust as of any Regular Distribution Date or Special
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 such
Trust and the distribution thereof to be made on that date. (Section 1.01)
Assuming that no redemption, purchase or default, in respect of any Equipment
Notes shall have occurred, the Pool Factor for each Trust will be 1.0000000 on
the date of issuance of the Certificates; thereafter, the Pool Factor for each
Trust will decline as described herein to reflect reductions in the Pool Balance
of such Trust. The amount of a Certificateholder's pro rata share of the Pool
Balance of a Trust can be determined by multiplying the par value of the
holder's Certificate of such Trust by the Pool Factor for such Trust as of the
applicable Regular Distribution Date or Special Distribution Date. Notice of the
Pool Factor and the Pool Balance for each Trust will be mailed to
Certificateholders of such Trust on each Regular Distribution Date and Special
Distribution Date. (Section 4.03)
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<PAGE> 74
As of the date of sale by the Trustee of the Certificates and assuming that
no redemption, purchase or default in the payment of principal, in respect of
any Equipment Notes shall occur, the Scheduled Payments of principal on the
Equipment Notes held in the Class A Trust, the Class B Trust, the Class C Trust,
the Class D Trust and the Class E Trust, and the resulting Pool Factors for such
Trusts after taking into account each Scheduled Payment, are set forth below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
TRUST TRUST TRUST TRUST
EQUIPMENT CLASS A EQUIPMENT CLASS B EQUIPMENT CLASS C EQUIPMENT
NOTES TRUST NOTES TRUST NOTES TRUST NOTES
SCHEDULED EXPECTED SCHEDULED EXPECTED SCHEDULED EXPECTED SCHEDULED
PAYMENTS OF POOL PAYMENTS OF POOL PAYMENTS OF POOL PAYMENTS OF
DATES PRINCIPAL* FACTOR* PRINCIPAL* FACTOR* PRINCIPAL* FACTOR* PRINCIPAL*
- ---------------------------- ----------- ----------- ------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
November , 1996............ $ 0 1.0000000 $ 0 1.0000000 $ 0 1.0000000 $ 0
January 2, 1997............. 0 1.0000000 0 1.0000000 105,514 0.9972048 4,685,414
July 2, 1997................ 2,276,945 0.9773801 786,460 0.9791655 723,460 0.9780393 2,212,375
January 2, 1998............. 0 0.9773801 0 0.9791655 707,629 0.9592931 3,146,323
July 2, 1998................ 1,929,227 0.9582146 723,460 0.9600000 1,845,142 0.9104126 1,869,244
January 2, 1999............. 0 0.9582146 94,500 0.9574966 3,554,989 0.8162357 4,474,079
July 2, 1999................ 1,929,227 0.9390491 723,460 0.9383310 3,252,178 0.7300807 2,790,586
January 2, 2000............. 0 0.9390491 0 0.9383310 4,368,892 0.6143423 4,690,885
July 2, 2000................ 1,929,227 0.9198836 1,429,247 0.9004682 2,884,166 0.5379365 3,221,326
January 2, 2001............. 548,473 0.9144349 1,575,571 0.8587290 5,633,508 0.3886966 1,624,516
July 2, 2001................ 1,687,427 0.8976715 3,276,136 0.7719393 4,641,547 0.2657352 0
January 2, 2002............. 283,770 0.8948524 4,088,966 0.6636166 5,512,897 0.1196905 0
July 2, 2002................ 3,778,372 0.8573169 2,805,475 0.5892955 3,189,846 0.0351868 535,127
January 2, 2003............. 2,433,431 0.8331425 1,617,259 0.5464519 694,614 0.0167854 0
July 2, 2003................ 4,442,443 0.7890099 90,675 0.5440498 0 0.0167854 0
January 2, 2004............. 4,923,689 0.7400965 193,512 0.5389234 0 0.0167854 0
July 2, 2004................ 5,726,783 0.6832049 1,500,023 0.4991856 633,616 0.0000000 0
January 2, 2005............. 4,678,960 0.6367227 7,343,262 0.3046518 0 0.0000000 0
July 2, 2005................ 6,305,037 0.5740866 6,164,909 0.1413343 0 0.0000000 0
January 2, 2006............. 6,709,169 0.5074357 4,551,861 0.0207488 0 0.0000000 0
July 2, 2006................ 10,096,592 0.4071331 0 0.0207488 0 0.0000000 0
January 2, 2007............. 8,499,288 0.3226986 0 0.0207488 0 0.0000000 0
July 2, 2007................ 9,016,328 0.2331277 0 0.0207488 0 0.0000000 0
January 2, 2008............. 9,205,783 0.1416747 783,225 0.0000000 0 0.0000000 0
July 2, 2008................ 10,355,428 0.0388008 0 0.0000000 0 0.0000000 0
January 2, 2009............. 2,951,173 0.0094829 0 0.0000000 0 0.0000000 0
July 2, 2009................ 954,563 0.0000000 0 0.0000000 0 0.0000000 0
<CAPTION>
CLASS E
TRUST
CLASS D EQUIPMENT CLASS E
TRUST NOTES TRUST
EXPECTED SCHEDULED EXPECTED
POOL PAYMENTS OF POOL
DATES FACTOR* PRINCIPAL* FACTOR*
- ---------------------------- ----------- ----------- -----------
<S> <<C> <C> <C>
November , 1996............ 1.0000000 $ 0 1.0000000
January 2, 1997............. 0.8398142 787,165 0.9401525
July 2, 1997................ 0.7641771 1,653,557 0.8144339
January 2, 1998............. 0.6566101 4,141,903 0.4995284
July 2, 1998................ 0.5927040 2,043,670 0.3441499
January 2, 1999............. 0.4397434 664,888 0.2935990
July 2, 1999................ 0.3443383 494,982 0.2559659
January 2, 2000............. 0.1839655 522,751 0.2162216
July 2, 2000................ 0.0738343 552,077 0.1742477
January 2, 2001............. 0.0182950 510,767 0.1354145
July 2, 2001................ 0.0182950 0 0.1354145
January 2, 2002............. 0.0182950 30,067 0.1331285
July 2, 2002................ 0.0000000 0 0.1331285
January 2, 2003............. 0.0000000 0 0.1331285
July 2, 2003................ 0.0000000 722,294 0.0782131
January 2, 2004............. 0.0000000 0 0.0782131
July 2, 2004................ 0.0000000 225,156 0.0610947
January 2, 2005............. 0.0000000 0 0.0610947
July 2, 2005................ 0.0000000 0 0.0610947
January 2, 2006............. 0.0000000 0 0.0610947
July 2, 2006................ 0.0000000 803,569 0.0000000
January 2, 2007............. 0.0000000 0 0.0000000
July 2, 2007................ 0.0000000 0 0.0000000
January 2, 2008............. 0.0000000 0 0.0000000
July 2, 2008................ 0.0000000 0 0.0000000
January 2, 2009............. 0.0000000 0 0.0000000
July 2, 2009................ 0.0000000 0 0.0000000
</TABLE>
- ---------------
* The information relating to scheduled payments of principal and expected Pool
Factors is indicative only and subject to change.
Any failure to make expected principal distributions on any Class of
Certificates on any Regular Distribution Date (other than the Final Legal
Distribution Date) will not constitute a PTC Event of Default with respect to
such Certificates.
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, the
applicable Trustee will include with each distribution of a Scheduled Payment or
Special Payment, respectively, to Certificateholders of the related Trust a
statement, giving effect to such distribution to be made on such Regular
Distribution Date or Special Distribution Date, setting forth the following
information (per $1,000 aggregate principal amount of Certificate for such
Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the amount
allocable to Make-Whole Amount (if any);
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust. (Section 4.03)
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With respect to the Certificates registered in the name of DTC's nominee on
the Record Date prior to each Distribution Date, the applicable Trustee will
request from DTC a securities position listing setting forth the names of all
DTC Participants reflected on DTC's books as holding interests in the
Certificates on such Record Date. On each Distribution Date, the applicable
Trustee will mail to each such DTC Participant the statement described above and
will make available additional copies as requested by such DTC participant for
forwarding to holders of Certificates. (Section 4.03(a)) See "-- Delivery and
Form; Book-Entry".
In addition, after the end of each calendar year, the applicable Trustee
will furnish to each Certificateholder of each Trust at any time during the
preceding calendar year a report containing the sum of the amounts determined
pursuant to clauses (i) and (ii) above with respect to the Trust for such
calendar year or, in the event such person was a Certificateholder during only a
portion of such calendar year, for the applicable portion of such calendar year,
and such other items as are readily available to such Trustee and which a
Certificateholder shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its U.S. federal income tax returns. With
respect to Certificates registered in the name of DTC's nominee, such report and
such other items shall be prepared on the basis of information supplied to the
applicable Trustee by the DTC Participants and shall be delivered by such
Trustee to such DTC Participants to be available for forwarding by such DTC
Participants to Certificate Owners in the manner described above. (Section
4.03(b))
INDENTURE EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN INDENTURE EVENT OF
DEFAULT
An event of default under an Indenture (an "Indenture Event of Default")
will include an event of default under the related Lease (a "Lease Event of
Default"). See "Description of Equipment Notes -- Indenture Events of Default;
Notice and Waiver". Since the Equipment Notes issued under an Indenture will be
held in more than one Trust, a continuing Indenture Event of Default under such
Indenture would affect the Equipment Notes held by each such Trust. There are no
cross-default provisions in the Indentures or the Leases. Consequently, events
resulting in an Indenture Event of Default under any particular Indenture may or
may not result in an Indenture Event of Default under any other Indenture. If an
Indenture Event of Default occurs in fewer than all of the Indentures,
notwithstanding the treatment of Equipment Notes issued under any Indenture
under which an Indenture Event of Default has occurred, payments of principal
and interest on the Equipment Notes issued pursuant to Indentures with respect
to which an Indenture Event of Default has not occurred will continue to be
distributed to the holders of the Certificates as originally scheduled, subject
to the Intercreditor Agreement. See "Description of the Intercreditor Agreement
- -- Priority of Distributions".
With respect to each Aircraft or Spare Engine, the applicable Owner Trustee
and Owner Participant will, under the related Indenture, have the right under
certain circumstances to cure Indenture Events of Default that result from the
occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee or the Owner Participant exercises any such cure right, the Indenture
Event of Default will be deemed to have been cured.
Because the Equipment Notes outstanding under an Indenture will be held by
more than one Trust, the ability of the Certificateholders with respect to any
one Trust to cause the Indenture Trustee with respect to any Equipment Notes
held in such Trust to accelerate the Equipment Notes under the related Indenture
or to direct the exercise of remedies by the Indenture Trustee under the related
Indenture will depend, in part, upon the proportion between the aggregate unpaid
principal amount of the Equipment Notes outstanding under such Indenture and
held in such Trust and the aggregate unpaid principal amount of all Equipment
Notes outstanding under such Indenture. Because the Equipment Notes outstanding
under an Indenture will be held by more than one Trust, each Trust will hold
Equipment Notes with different terms from the Equipment Notes held in the other
Trusts and therefore the Certificateholders of a Trust may have divergent or
conflicting interests from those of the Certificateholders of the other Trusts
holding Equipment Notes relating to the same Indenture.
In the event that the same institution acts as Trustee of multiple Trusts,
in the absence of instructions from the Certificateholders of any such Trust,
such Trustee could be faced with a potential conflict of interest
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<PAGE> 76
upon an Indenture Event of Default. In such event, one or more Trustees may
resign as Trustee of one or all such Trusts, and a successor trustee would then
be appointed in accordance with the terms of the applicable Pass Through Trust
Agreement. Fleet National Bank will be the initial Trustee under each Trust.
Upon the occurrence and during the continuation of any Indenture Event of
Default under any Indenture, the Controlling Party shall direct the Indenture
Trustee under such Indenture in the exercise of remedies thereunder and may
accelerate and sell all (but not less than all) of the Equipment Notes issued
under such Indenture to any person, subject to certain limitations. See
"Description of the Intercreditor Agreement -- Sale of Equipment Notes and
Equipment". The proceeds of such sale will be distributed pursuant to the
provisions of the Intercreditor Agreement. Any proceeds received by the
applicable Trustee upon any such sale shall be deposited in the applicable
Special Payments Account and shall be distributed to the Certificateholders of
such Trust on a Special Distribution Date. (Sections 4.01 and 4.02) The market
for Equipment Notes at the time of the existence of any Indenture Event of
Default may be very limited, and there can be no assurance as to the price at
which they could be sold. If the Controlling Party sells any such Equipment
Notes for less than their outstanding principal amount, certain
Certificateholders will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against America West,
any Owner Trustee, any Owner Participant or any Trustee.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Trust by the Subordination
Agent on account of the Equipment Notes or other Trust Property held in such
Trust following an Indenture Event of Default under any Indenture shall be
deposited in the Special Payments Account for such Trust and shall be
distributed to the Certificateholders of such Trust on a Special Distribution
Date. (Sections 4.01 and 4.02) In addition, if, following an Indenture Event of
Default under any Indenture, the applicable Owner Participant or Owner Trustee
exercises its option to purchase the outstanding Equipment Notes issued under
such Indenture, the price paid by such Owner Participant or Owner Trustee for
the Equipment Notes issued under such Indenture and distributed to such Trust by
the Subordination Agent shall be deposited in the Special Payments Account for
such Trust and shall be distributed to the Certificateholders of such Trust on a
Special Distribution Date. (Sections 4.01 and 4.02)
Any funds representing payments received with respect to any defaulted
Equipment Notes held in a Trust, or the proceeds from the sale of any Equipment
Notes, held by such Trustee in the Special Payments Account for such Trust
shall, to the extent practicable, be invested and reinvested by such Trustee in
Permitted Investments pending the distribution of such funds on a Special
Distribution Date. (Section 4.04) Permitted Investments are defined as
obligations of the United States or agencies or instrumentalities thereof the
payment of which is backed by the full faith and credit of the United States and
which mature in not more than 60 days or such lesser time as is required for the
distribution of any such funds on a Special Distribution Date. (Section 1.01)
Each Pass Through Trust Agreement provides that the Trustee of the related
Trust shall, within 90 days after the occurrence of any default, give to the
Certificateholders of such Trust notice, transmitted by mail, of all uncured or
unwaived defaults with respect to such Trust known to it, provided that, except
in the case of default in the payment of principal, Make-Whole Amount, if any,
or interest on any Equipment Note the applicable Trustee shall be protected in
withholding such notice if and so long as it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders.
(Section 7.01) The term "default" as used in this paragraph with respect to any
Trust only means the occurrence of an Indenture Event of Default under any
Indenture pursuant to which Equipment Notes held by such Trust were issued, as
described above, except that in determining whether any such Indenture Event of
Default has occurred, any grace period or notice in connection therewith shall
be disregarded.
Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Agreement at
the request of such Certificateholders. (Section 7.02(e))
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<PAGE> 77
In certain cases, the holders of the Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of the holders of all the Certificates of such Trust
waive any past default under the related Pass Through Trust Agreement or, if the
Trustee of such Trust is the Controlling Party, may direct the Trustee to
instruct the applicable Indenture Trustee to waive any past Indenture Event of
Default with respect to Equipment Notes held in such Trust and thereby annul any
direction given by such holders or the Trustee to such Indenture Trustee with
respect thereto, except (i) a default in the deposit of any Scheduled Payment or
Special Payment or in the distribution thereof, (ii) a default in payment of the
principal, Make-Whole Amount, if any, or interest with respect to any of the
Equipment Notes held in such Trust and (iii) a default in respect of any
covenant or provision of the related Pass Through Trust Agreement that cannot be
modified or amended without the consent of each Certificateholder of such Trust
affected thereby. (Section 6.05) Each Indenture will provide that, with certain
exceptions, the holders of the majority in aggregate unpaid principal amount of
the Equipment Notes issued thereunder may on behalf of all such holders waive
any past Indenture Event of Default thereunder. Notwithstanding the foregoing
provisions of this paragraph, however, pursuant to the Intercreditor Agreement,
only the Controlling Party will be entitled to waive any such past default or
Indenture Event of Default.
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Upon the occurrence and during the continuation of a Triggering Event, with
ten days' written notice to the Trustee and each other Certificateholder of the
same Class, (i) the Class B Certificateholders shall have the right to purchase
all, but not less than all, of the Class A Certificates, (ii) the Class C
Certificateholders shall have the right to purchase all, but not less than all,
of the Class A Certificates and the Class B Certificates, (iii) the Class D
Certificateholders shall have the right to purchase all, but not less than all,
of the Class A Certificates, the Class B Certificates and the Class C
Certificates and (iv) the Class E Certificateholders shall have the right 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, in each
case at a purchase price equal to the Pool Balance of the relevant Class or
Classes of Certificates plus accrued and unpaid interest thereon to the date of
purchase without any Make-Whole Amount but including any other amounts due to
the Certificateholders of such Class or Classes. In each case, if prior to the
end of the ten-day period, any other Certificateholder of the same Class
notifies the purchasing Certificateholder that the other Certificateholder wants
to participate in such purchase, then such other Certificateholder may join with
the purchasing Certificateholder to purchase the Certificates pro rata based on
the interest in the Trust held by each Certificateholder. (Section 6.01(b))
PTC EVENT OF DEFAULT
A PTC Event of Default is defined under each Pass Through Trust Agreement
as 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 Class of
Certificates on any Distribution Date (unless, in the case of the Class A, B or
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 Certificateholders entitled thereto). A PTC Event
of Default with respect to the most senior Class of Certificates resulting from
an Indenture Event of Default under all Indentures will constitute a Triggering
Event.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
America West will be prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other corporation unless (i) the surviving successor or transferee
corporation shall (a) be a "citizen of the United States" as defined in Section
40102(a)(15) of Title 49 of the United States Code, as amended, relating to
aviation (the "Federal Aviation Act"), (b) be a United States certificated air
carrier and (c) expressly assume all of the obligations of America West
contained in the Pass Through Trust Agreements, the Refunding Agreements, the
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Indentures, the Leases, and certain related documents; (ii) immediately after
giving effect to such transaction, no Indenture Event of Default shall have
occurred and be continuing; and (iii) America West shall have delivered a
certificate and an opinion or opinions of counsel indicating that such
transaction complies with such conditions. (Section 5.02)
The Pass Through Trust Agreements, the Leases, the Indentures and the
Refunding Agreements will not contain any covenants or provisions which may
afford the applicable Trustee or Certificateholders protection in the event of a
highly leveraged transaction, including transactions effected by management or
affiliates, which may or may not result in a change in control of America West.
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting the
execution by the Company and the Trustee of one or more agreements supplemental
to such Pass-Through Trust Agreement or, if applicable, to the Intercreditor
Agreement, any Refunding Agreement, any Liquidity Facility or any Indenture,
without the consent of the holders of any of the Certificates of the related
Trust, (i) to evidence the succession of another corporation to America West and
the assumption by such corporation of America West's obligations under such Pass
Through Trust Agreement, (ii) to add to the covenants of America West for the
benefit of holders of such Certificates or to surrender any right or power in
such Pass Through Trust Agreement conferred upon America West, (iii) to correct
or supplement any provision of such Pass Through Trust Agreement, the
Intercreditor Agreement, any Refunding Agreement, any Liquidity Facility or any
Indenture which may be defective or inconsistent with any other provision in
such Pass Through Trust Agreement or to cure any ambiguity, correct any mistake,
or to modify any other provisions with respect to matters or questions arising
under such Pass Through Trust Agreement, the Intercreditor Agreement, any
Refunding Agreement, any Liquidity Facility or any Indenture, provided such
action shall not materially adversely affect the interests of the holders of
such Certificates, (iv) to add to such Pass Through Trust Agreement such other
provisions as may be expressly permitted by the Trust Indenture Act and (v) to
provide for a successor Trustee or to add to or change any provision of such
Pass Through Trust Agreement as shall be necessary to facilitate the
administration of the Trust thereunder by more than one Trustee, provided that
in each case, such modification does not adversely affect the status of the
Trust as a grantor trust under Subpart E, Part I of Subchapter J of Chapter 1 of
Subtitle A of the Code for U.S. federal income tax purposes. (Section 9.01)
Each Pass Through Trust Agreement also contains provisions permitting the
execution, with the consent of the holders of the Certificates of the related
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, and with the consent of the applicable Owner
Trustee (such consent not to be unreasonably withheld), of supplemental trust
agreements adding any provisions to or changing or eliminating any of the
provisions of such Pass Through Trust Agreement or, if applicable, the
Intercreditor Agreement, any Liquidity Facility or any Refunding Agreement or
modifying the rights of the Certificateholders, except that no such supplemental
agreement may, without the consent of the holder of each Certificate so affected
thereby, (a) 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 in respect of any Certificate related to such Trust, or change the
date or place of any payment in respect of any Certificate, or make
distributions payable in coin or currency other than that provided for in such
Certificates, or impair the right of any Certificateholder of such Trust to
institute suit for the enforcement of any such payment when due, (b) permit the
disposition of any Equipment Note held in such Trust, except as provided in such
Pass Through Trust Agreement, or otherwise deprive any Certificateholder of the
benefit of the ownership of the applicable Equipment Notes, (c) alter the
priority of distributions specified in the Intercreditor Agreement, (d) reduce
the percentage of the aggregate fractional undivided interests of the Trust
provided for in such Pass Through Trust Agreement, the consent of the holders of
which is required for any such supplemental agreement or for any waiver provided
for in such Pass Through Trust Agreement, (e) modify any of the provisions
relating to supplemental agreements that may be executed with the consent of
Certificateholders as described in this paragraph or relating to the rights of
the Certificateholders in respect of the waiver of Events of Default or receipt
of payment or (f) adversely affect the status of the Trust as a grantor trust
under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A of the Code
for U.S. federal income tax purposes. (Section 9.02)
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TERMINATION OF THE TRUSTS
The obligations of America West, if any, and the Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the applicable
Pass Through Trust Agreement and the disposition of all property held in such
Trust. The Trustee will send to each Certificateholder of record of such Trust
notice of the termination of such Trust, the amount of the proposed final
payment and the proposed date for the distribution of such final payment for
such Trust. The final distribution to any Certificateholder of such Trust will
be made only upon surrender of such Certificateholder's Certificates at the
office or agency of the applicable Trustee specified in such notice of
termination. (Section 11.01)
THE TRUSTEE
Fleet National Bank will act as Trustee and as paying agent and registrar
for the Certificates of each Trust. With certain exceptions, the Trustee makes
no representations as to the validity or sufficiency of the Basic Agreement, the
Trust Supplements, the Refunding Agreements, the Intercreditor Agreement, the
Certificates, the Equipment Notes, the Indentures, the Leases or other related
documents. (Sections 7.03 and 7.14) The Trustee of any Trust shall not be
liable, with respect to the Certificates of such Trust, for any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
holders of a majority in principal amount of outstanding Certificates of such
Trust. Subject to certain provisions, the Trustee shall be under no obligation
to exercise any of its rights or powers under any Pass Through Trust Agreement
at the request of any holders of Certificates issued thereunder unless there
shall have been offered to the Trustee reasonable indemnity. (Section 7.02(e))
Each Pass Through Trust Agreement provides that the Trustee, in its individual
or any other capacity, may acquire and hold Certificates issued thereunder and,
subject to certain conditions, may otherwise deal with America West, any Owner
Trustees or the Indenture Trustees with the same rights it would have if it were
not the Trustee. (Section 7.04)
The Trustee may resign with respect to any or all of the Trusts at any
time, in which event America West will be obligated to appoint a successor
trustee. If the Trustee ceases to be eligible to continue as Trustee with
respect to a Trust or becomes incapable of acting as Trustee or becomes
insolvent, America West may remove such Trustee, or, alternatively, any
Certificateholder of such Trust 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 such Trustee and the appointment of a successor
trustee. (Sections 7.07 and 7.08). Any resignation or removal of the Trustee
with respect to a Trust and appointment of a successor trustee for such Trust
does not become effective until acceptance of the appointment by the successor
trustee. Pursuant to such resignation and successor trustee provisions, it is
possible that a different trustee could be appointed to act as the successor
trustee with respect to each Trust. All references in this Prospectus to the
Trustee should be read to take into account the possibility that the Trusts
could have different successor trustees in the event of such a resignation or
removal.
The Basic Agreement provides that America West will pay, or cause to be
paid, the Trustee's fees and expenses and indemnify, or cause to be indemnified,
the Trustee against certain liabilities. (Section 7.06)
DELIVERY AND FORM; BOOK-ENTRY
GENERAL
Upon issuance, each Class of Certificates will be represented by one or
more fully registered global certificates (the "Global Certificates"). Each
Global Certificate will be deposited with, or on behalf of, The Depository Trust
Company ("DTC ") and registered in the name of Cede & Co. ("Cede") or its
nominee. No person acquiring an interest in such Global Certificates
("Certificate Owner") will be entitled to receive a certificate representing
such person's interest in such Certificates, except as set forth below under "--
Definitive Certificates." Unless and until Definitive Certificates are issued
under the limited circumstances described herein, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants (as defined below), and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer, as the case
may be, to distributions, notices,
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reports and statements to DTC or Cede, as the registered holder of such Global
Certificates, or to DTC Participants for distribution to Certificate Owners in
accordance with DTC procedures.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
"clearing agency" registered pursuant to section 17A of the Exchange Act. DTC
was created to hold securities for its participants ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entries, thereby eliminating the need for
physical transfer of certificates. DTC Participants include securities brokers
and dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant either directly or indirectly ("Indirect Participants").
Certificate Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, the Global Certificates may do so only through DTC Participants
and Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC
Participants or Indirect Participants, as the case may be. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, because such payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward such payments in same-day funds to DTC
Participants who are credited with ownership of the Certificates in amounts
proportionate to the principal amount of each such DTC Participant's respective
holdings of beneficial interests in the Global Certificates. DTC Participants
will thereafter forward payments to Indirect Participants or Certificate Owners,
as the case may be, in accordance with customary industry practices. The
forwarding of such distributions to the Certificate Owners will be the
responsibility of such DTC Participants. Unless and until the Definitive
Certificates are issued under the limited circumstances described herein, the
only "Certificateholder" will be Cede, as nominee of DTC. Certificate Owners
will not be recognized by the Trustee as Certificateholders, as such term is
used in the Basic Agreement, and Certificate Owners will be permitted to
exercise the rights of Certificateholders only indirectly through DTC and DTC
Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
the Certificates among DTC Participants on whose behalf it acts with respect to
the Certificates and to receive and transmit distributions of principal,
Make-Whole Amount, if any, and interest with respect to the Certificates. DTC
Participants and Indirect Participants with which Certificate Owners have
accounts with respect to the Certificates similarly are required to make book-
entry transfers and receive and transmit such payments on behalf of their
respective customers. Accordingly, although Certificate Owners will not possess
the Certificates, the Rules provide a mechanism by which Certificate Owners will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Certificate Owner to pledge
the Certificates to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Certificates, may be limited
due to the lack of a physical certificate for such Certificates.
DTC will take any action permitted to be taken by a Certificateholder under
the Basic Agreement only at the direction of one or more DTC Participants to
whose accounts with DTC the Certificates are credited. Additionally, DTC has
advised that in the event any action requires approval by Certificateholders of
a certain percentage of beneficial interest in each Trust, DTC will take such
action only at the direction of and on behalf of DTC Participants whose holders
include undivided interests that satisfy any such percentage. DTC may take
conflicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of DTC Participants whose holders include such
undivided interests.
Neither America West nor the Trustee will have any liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in the Certificates held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that America West believes to be reliable, but
America West takes no responsibility for the accuracy thereof.
DEFINITIVE CERTIFICATES
Certificates will be issued in certificated form ("Definitive
Certificates") to Certificate Owners or their nominees, rather than to DTC or
its nominee, only if (i) DTC advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and America West is unable to locate a
qualified successor, (ii) America West, at its option, elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Indenture
Event of Default, Certificate Owners with fractional undivided interests
aggregating not less than a majority in interest in such Trust advise the
Trustee, America West and DTC through DTC Participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the Certificate Owners' best interest. (Section 3.09(c))
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificate Owners through
DTC Participants of the availability of Definitive Certificates. Upon surrender
by DTC of the certificates representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue the Certificates as
Definitive Certificates to Certificate Owners. (Section 3.09(c))
Distributions of principal, Make-Whole Amount, if any, and interest with
respect to Certificates will thereafter be made by the Trustee directly in
accordance with the procedures set forth in the Basic Agreement and the
applicable Trust Supplements, to holders in whose names the Definitive
Certificates were registered at the close of business on the applicable record
date. Such distributions will be made by check mailed to the address of such
holder as it appears on the register maintained by the Trustee. (Section 4.02(a)
The final payment on any Certificate, however, will be made only upon
presentation and surrender of such Certificate at the office or agency specified
in the notice of final distribution to Certificateholders. (Section 11.01)
Definitive Certificates will be freely transferable and exchangeable at the
office of the Trustee upon compliance with the requirements set forth in the
Pass Through Trust Agreements. No service charge will be imposed for any
registration of transfer or exchange, but payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection therewith
shall be required. (Section 3.04)
If any Definitive Certificate at any time is mutilated, destroyed, stolen
or lost, such Definitive Certificate may be replaced at the cost of the
applicant (including a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any fees and expenses of the
Trustee and any registrar) at the office of the Trustee or the registrar, if
applicable, upon provision of evidence satisfactory to the Trustee or the
registrar, if applicable, that such Definitive Certificate was destroyed, stolen
or lost, together with such indemnity as the Trustee and the registrar may
require. Mutilated Definitive Certificates must be surrendered before
replacements will be issued. (Section 3.05)
CERTIFICATE AS TO COMPLIANCE
Each Pass Through Trust Agreement provides that the Company is required to
furnish to the Trustee, not less often than annually, a brief certificate from
the principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of the Company's compliance with
all conditions and covenants under such Pass Through Trust Agreement (for such
purposes, such compliance shall be determined without regard to any period of
grace or requirement of notice provided under such Pass Through Trust
Agreement). (Section 8.04(d))
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DESCRIPTION OF THE LIQUIDITY FACILITIES
The following summary describes certain terms of the Liquidity Facilities
and certain provisions of the Intercreditor Agreement relating to the Liquidity
Facilities. Forms of the Liquidity Facilities and the Intercreditor Agreement
have been filed as exhibits to the Registration Statement. In addition, forms of
the Liquidity Facilities and the Intercreditor Agreement will be filed by
America West with the Commission as exhibits to a Current Report on Form 8-K.
The statements under this caption are a summary and do not purport to be
complete. The summary makes use of terms defined in, and is qualified in its
entirety by reference to, all of the provisions of the Liquidity Facilities and
the Intercreditor Agreement. The provisions of the Liquidity Facilities are
substantially identical except as otherwise indicated. Section references in
parentheses are to relevant sections of the Liquidity Facilities and the
Intercreditor Agreement.
GENERAL
With respect to the Certificates to be issued by each Trust (other than the
Class D and the Class E Trusts), the Subordination Agent will enter into a
separate Liquidity Facility with the Liquidity Provider pursuant to which the
Liquidity Provider will make one or more advances to the Subordination Agent to
pay interest on such Certificates subject to certain limitations. The Liquidity
Facility for each Trust is intended to enhance the likelihood of timely receipt
by the Certificateholders of such Trust of the interest payable on the
Certificates of such Trust at the Stated Interest Rate therefor on three
consecutive Regular Distribution Dates. If interest payment defaults occur which
exceed the amount covered by or available under the Liquidity Facility for any
Trust, the Certificateholders of such Trust will bear their allocable share of
the deficiencies to the extent that there are no other sources of funds.
Although Kredietbank N.V., acting through its New York branch, is the Liquidity
Provider for each Trust entitled to the benefits of a Liquidity Facility, it may
be replaced by another entity with respect to one or more such Trusts under
certain circumstances. Therefore, the Liquidity Provider for a given Trust at
any given time may be different from the Liquidity Provider for any other Trust.
DRAWINGS
The initial stated amount available under the Liquidity Facilities for the
Class A Trust, the Class B Trust and the Class C Trust will be $ ,
$ and $ , respectively. Except as otherwise provided below,
the Liquidity Facility for each Trust will enable the Subordination Agent to
make Interest Drawings thereunder promptly after any Regular Distribution Date
to pay interest then due and payable on the Certificates of such Trust at the
Stated Interest Rate for such Trust to the extent that the amount, if any,
available to the Subordination Agent on such Regular Distribution Date is not
sufficient to pay such interest; provided, however, that the maximum amount
available to be drawn under such Liquidity Facility on any Regular Distribution
Date to fund any shortfall of interest on such Certificates will not exceed the
Required Amount with respect to such Liquidity Facility. The Liquidity Facility
for any Trust does not provide for drawings thereunder to pay for principal of,
or Make-Whole Amount on the Certificates of such Trust or any interest on the
Certificates of such Trust in excess of the Stated Interest Rate or principal of
or interest or Make-Whole Amount on, the Certificates of any other Trust.
(Liquidity Facilities, Section 2.2; Intercreditor Agreement, Section 3.6)
Each payment by the Liquidity Provider under each Liquidity Facility
reduces pro tanto the amount available to be drawn under such Liquidity
Facility, subject to reinstatement as hereinafter described. With respect to any
Interest Drawings under the Liquidity Facility for any Trusts, upon
reimbursement of the Liquidity Provider in full for the amount of such Interest
Drawings plus interest thereon, the amount available to be drawn under such
Liquidity Facility in respect of interest on the Certificates of such Trust
shall be reinstated to the then Required Amount of such Liquidity Facility;
provided, however, that such Liquidity Facility shall not be so reinstated at
any time if (i) a Liquidity Event of Default shall have occurred and be
continuing or (ii) both (A) a Triggering Event shall have occurred and be
continuing and (B) a Performing Note Deficiency exists. With respect to any
other drawings under such Liquidity Facility, amounts available to be drawn
thereunder are not subject to reinstatement. The stated amount of the Liquidity
Facility for any Trust will be automatically reduced from time to time to an
amount equal to the next three successive interest
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payments due on the Certificates of such Trust (without regard to expected
future payment of principal of such Certificates) at the Stated Interest Rate
for such Trust. The Liquidity Provider will be paid a fee on the average amount
available to be drawn under the initial Liquidity Facility until the earlier of
the date when the commitment under the Liquidity Facility terminates and the
date when a Downgrade Drawing, if any, is made, in an amount and on the dates
specified in the Liquidity Facilities. (Liquidity Facilities, Sections 2.2, 2.3
and 2.4(a); Intercreditor Agreement, Section 3.6(j))
If at any time the debt rating of the Liquidity Provider issued by either
Rating Agency is lower than the applicable Threshold Rating, then the Liquidity
Provider for the related Trust or the Subordination Agent may arrange for a
Replacement Facility (as defined below). In the event that such Liquidity
Facility is not replaced with a Replacement Facility within the period specified
in the Intercreditor Agreement after notice of the downgrading and as otherwise
provided in the Intercreditor Agreement, the Subordination Agent shall request
the Downgrade Drawing in an amount equal to all available and undrawn amounts
thereunder and shall hold the proceeds thereof in the Cash Collateral Account
for such Trust as cash collateral to be used for the same purposes and under the
same circumstances as cash payments of Interest Drawings under such Liquidity
Facility would be used. (Liquidity Facilities, Sections 2.2(b) and 2.6;
Intercreditor Agreement, Section 3.6(c) and (f))
A "Replacement Facility" for any Trust will mean an irrevocable liquidity
facility in substantially the form of the initial Liquidity Facility for such
Trust, including reinstatement provisions, or, subject to certain conditions, 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 person having debt
ratings which are equal to or higher than the Threshold Rating. (Intercreditor
Agreement, Section 1.1)
The Liquidity Facility for each Trust provides that the Liquidity
Provider's obligations thereunder will expire on the earliest of (i) 15 days
later than the Final Legal Distribution Date for the Certificates of such Trust;
(ii) the date on which the Subordination Agent delivers a certificate certifying
that all of the Certificates of such Trust have been paid in full; (iii) the
date on which the Subordination Agent delivers a certificate certifying that a
Replacement Facility has been substituted for such Liquidity Facility; (iv) the
date on which the Liquidity Provider makes the Final Drawing; and (v) the date
on which no amount is or may (by reason of reinstatement) become available for
drawing under such Liquidity Facility. (Liquidity Facilities, Sections 1.1(a)
and 2.4(b))
The Subordination Agent, in consultation with America West (whose
recommendations the Subordination Agent will accept), may, subject to certain
limitations, arrange for a Replacement Facility at any time to replace the
Liquidity Facility for any Trust. If such replacement facility is provided at
any time after a Downgrade Drawing under such Liquidity Facility, all funds on
deposit in the relevant Cash Collateral Account will be returned to the
Liquidity Provider being replaced. (Intercreditor Agreement, Section 3.6(e))
The Intercreditor Agreement provides that the Subordination Agent shall
hold the proceeds of a Final Drawing (defined below) made in accordance with the
provisions set forth under "-- Liquidity Events of Default" below in the Cash
Collateral Account for the related Trust as cash collateral to be used for the
same purposes and under the same circumstances, and subject to the same
conditions, as cash payments of Interest Drawings under such Liquidity Facility
would be used. The Intercreditor Agreement further provides that the
Subordination Agent shall not fail to take any action which may be expressly
required to be taken by the Subordination Agent in order to make a Final Drawing
under a Liquidity Facility. (Intercreditor Agreement, Section 3.6(i))
Drawings (other than a Final Drawing) under any Liquidity Facility will be
made by delivery by the Subordination Agent of a certificate in the form
required by such Liquidity Facility. Upon receipt of such a certificate, the
Liquidity Provider is obligated to make payment of the drawing requested thereby
in immediately available funds. Upon payment by the Liquidity Provider of the
amount specified in any drawing
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under any Liquidity Facility, the Liquidity Provider will be fully discharged of
its obligations under such Liquidity Facility with respect to such drawing and
will not thereafter be obligated to make any further payments under such
Liquidity Facility in respect of such drawing to the Subordination Agent or any
other person or entity who makes a demand for payment in respect of interest on
the related Certificates. (Liquidity Facilities, Section 2.2)
REIMBURSEMENT OF DRAWINGS
Amounts drawn under any Liquidity Facility by reason of an Interest Drawing
or a Final Drawing, and any portion of a Downgrade Drawing applied to the
payment of interest on the Certificates, will be immediately due and payable,
together with interest on the amount of such drawing at a rate equal to (i) in
the case of an Interest Drawing or the portion of a Downgrade Drawing applied to
the payment of interest or the Certificates, with respect to the period from the
date of its borrowing to (but excluding) the third business day following the
applicable Liquidity Provider's receipt of the notice of the applicable drawing,
at the Base Rate plus 1.50% per annum, and thereafter, at LIBOR for the
applicable Interest Period plus 1.50% per annum and (ii) in the case of a Final
Drawing, at the Base Rate; provided that the Subordination Agent will be
obligated to reimburse such amounts only to the extent that the Subordination
Agent has available funds therefor. The "Base Rate" will be a per annum interest
rate, determined as provided in each Liquidity Facility, generally equal to the
higher of (i) the base commercial lending rate announced from time to time by
the Liquidity Provider and (ii) the rate quoted by the Liquidity Provider to
dealers in the New York federal funds market for overnight offering of dollars
by the Liquidity Provider for deposit, plus 0.50% per annum. "LIBOR" with
respect to an Interest Period will be an interest rate, determined as provided
in each Liquidity Facility, generally equal to the rate per annum at which
deposits in U.S. dollars are offered for such Interest Period by the Liquidity
Provider to prime banks in the London interbank market. The "Interest Period "
with respect to a drawing which bears interest based on LIBOR will be each of
the following periods: (i) the period beginning on the date such drawing began
to bear interest based on LIBOR 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.
(Liquidity Facilities, Sections 1.1, 2.5 and 3.7)
The amount drawn under the Liquidity Facility for any Trust by reason of
the Downgrade Drawing and deposited in the Cash Collateral Account will be
treated as follows: (i) such amount will be released on any Regular Distribution
Date to the Liquidity Provider to the extent that such amount exceeds the
Required Amount for such Trust; (ii) any portion of such amount withdrawn from
the Cash Collateral Account for such Trust to pay interest on the related
Certificates will be treated in the same way (including interest payable
thereon) as Interest Drawings; and (iii) the balance of such amount will be
invested in Eligible Investments. (Liquidity Facilities, Section 2.6;
Intercreditor Agreement, Section 3.6(f)) The Downgrade Drawing under any
Liquidity Facility (other than any portion thereof applied to the payment of
interest on the Certificates) will bear interest at a rate equal to (i) during
the period from the date of its borrowing to (but excluding) the third business
day following the applicable Liquidity Provider's receipt of the notice of such
Downgrade Drawing, at the Base Rate, and (ii) thereafter, at LIBOR for the
applicable Interest Period plus 0.40% per annum; provided that the Subordination
Agent will be obligated to pay such amount only to the extent that the
Subordination Agent has funds available therefor. (Liquidity Facilities,
Sections 2.6 and 3.7)
LIQUIDITY EVENTS OF DEFAULT
Events of Default under each Liquidity Facility (each, a "Liquidity Event
of Default ") will consist of: (i) the acceleration of all the Equipment Notes;
and (ii) the failure to pay all of the Equipment Notes at maturity. A Liquidity
Event of Default shall not occur upon an automatic acceleration of the Equipment
Notes as a result of certain bankruptcy events related to America West.
(Liquidity Facilities, Section 1.1)
If (i) both (A) a Triggering Event shall have occurred and be continuing
and (B) a Performing Note Deficiency exists or (ii) a Liquidity Event of Default
shall have occurred and be continuing, the Liquidity Provider may, in its
discretion, make a final drawing ("Final Drawing") of all available and undrawn
amounts under the Liquidity Facilities whereupon (i) the Liquidity Provider
shall have no further obligation to make Drawings under the Liquidity Facility,
(ii) any Drawing remaining unreimbursed shall be automatically
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<PAGE> 85
converted into a Final Drawing under such Liquidity Facility, and (iii) all
amounts owing to the Liquidity Provider shall automatically become accelerated.
(Liquidity Facilities, Section 6.1) Notwithstanding the foregoing, the
Subordination Agent will be obligated to pay amounts owing to the Liquidity
Provider only to the extent of funds available therefor after giving effect to
the payments in accordance with the provisions set forth under "Description of
the Intercreditor Agreement -- Priority of Distributions". (Liquidity
Facilities, Section 2.9)
Upon the circumstances described below under "Description of the
Intercreditor Agreement -- Intercreditor Rights", the Liquidity Provider may
become the Controlling Party with respect to the exercise of remedies under the
Indentures. (Intercreditor Agreement, Section 2.6(c))
LIQUIDITY PROVIDER
The Liquidity Provider will be the Belgian bank Kredietbank N.V., acting
through its New York branch. Kredietbank N.V. was established in 1935. As of
December 31, 1995 Kredietbank N.V. had total assets in excess of 3,076 billion
Belgian francs (approximately $100 billion). Kredietbank N.V. provides
commercial, investment banking and capital market services nationally and
internationally to public, corporate and banking customers and has offices in 26
countries. Kredietbank N.V. currently has long-term unsecured debt ratings of
Aa2 from Moody's and AA- from Standard & Poor's, and short-term unsecured debt
ratings of P-1 from Moody's and A1+ from Standard & Poor's.
The New York branch of Kredietbank N.V. is licensed and subject to
supervision and regulation by the Superintendent of Banks of the State of New
York. It is examined by the New York State Banking Department and is subject to
banking laws and regulations applicable to a foreign bank that operates a New
York branch. It is also subject to review and supervision by the Federal Reserve
Bank.
Kredietbank N.V. has been active in aircraft finance since the mid 1980s
and has a significant portfolio of loans secured by modern commercial jet and
turboprop aircraft. Kredietbank N.V. has established business relationships with
most leading international airlines and aircraft manufacturing companies.
The information set forth above concerning Kredietbank N.V. and its New
York branch was provided by Kredietbank N.V. and America West takes no
responsibility for the accuracy thereof.
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<PAGE> 86
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
The following summary describes certain provisions of the Intercreditor
Agreement. A form of the Intercreditor Agreement has been filed as an exhibit to
the Registration Statement. In addition, a form of the Intercreditor Agreement
will be filed by America West with the Commission as an exhibit to a Current
Report on Form 8-K. The summary does not purport to be complete. The summary
makes use of terms defined in, and is qualified in its entirety by reference to,
all of the provisions of the Intercreditor Agreement. Section references in
parentheses are to relevant sections of the Intercreditor Agreement, unless
otherwise indicated.
INTERCREDITOR RIGHTS
CONTROLLING PARTY
Pursuant to the Intercreditor Agreement, each Trustee and the Liquidity
Provider shall agree that, with respect to any Indenture at any given time, the
Indenture Trustee will be directed (a) in taking, or refraining from taking, any
action with respect to such Indenture or the related Equipment Notes 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 (a) in accordance with the directions of the Trustees
representing holders of Certificates representing an undivided interest in such
principal amount of Equipment Notes), so long as no Indenture Event of Default
shall have occurred and be continuing thereunder, and (b) after the occurrence
and during the continuance of an Indenture Event of Default thereunder, in
taking, or refraining from taking, any action with respect to such Indenture or
such Equipment Notes, including exercising remedies thereunder (including
accelerating such Equipment Notes or foreclosing the lien on the Equipment
securing such Equipment Notes), by the Controlling Party. (Section 2.6(a)) See
"Description of the Certificates -- Indenture Events of Default and Certain
Rights Upon an Indenture Event of Default" for a description of the rights of
the Certificateholders of each Trust to direct the respective Trustee.
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 the Class D Certificates, the Class E Trustee. For purposes of giving effect
to the foregoing, the Trustees (other than the Controlling Party) shall
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. (Section 2.6(b))
Notwithstanding the foregoing, the Liquidity Provider with the greatest amount
of unreimbursed Liquidity Obligations payable to it under the Liquidity
Facilities shall have the right to elect to become the Controlling Party with
respect to any such 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 have not been paid in full. (Section 2.6(c))
SALE OF EQUIPMENT NOTES OR EQUIPMENT
Following the occurrence and during the continuation of any Indenture Event
of Default under any Indenture, the Controlling Party shall direct the related
Indenture Trustee in the exercise of remedies thereunder and may accelerate and,
subject to the provisions of the immediately following sentence, sell all (but
not less than all) of the Equipment Notes issued under such Indenture to any
person. 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 under any Indenture or (y) the bankruptcy or
insolvency of America West, then without the consent of each Trustee, (a) no
Equipment 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
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<PAGE> 87
Minimum Sale Price for such Equipment or such Equipment Notes, and (b) the
amount and payment dates of rentals payable by America West under the Lease for
such Equipment 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 under such
Indenture as the discount rate. (Section 4.1(a))
After a Triggering Event occurs and any Equipment Note becomes a
Non-Performing Equipment Note, the Subordination Agent will be required to
obtain LTV Appraisals for the Equipment 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 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 Equipment). (Section 4.1(a))
PRIORITY OF DISTRIBUTIONS
So long as no Triggering Event shall have occurred, the payments in respect
of the Equipment Notes and certain other payments received on each Distribution
Date will be promptly distributed by the Subordination Agent on such
Distribution Date in the following order of priority:
(i) all accrued and unpaid Liquidity Obligations (other than the
principal amount of any Drawing under the Liquidity Facilities and
any interest accrued thereon) (the "Liquidity Expenses") to each
Liquidity Provider;
(ii) interest accrued on all Liquidity Obligations to each Liquidity
Provider;
(iii) such amount necessary to pay or reimburse the Liquidity Provider for
all Liquidity Obligations then due (other than amounts payable as
described in clauses (i) and (ii) above) and, if applicable, to
replenish each Cash Collateral Account up to its respective Required
Amount;
(iv) Expected Distributions to the holders of Class A Certificates;
(v) Expected Distributions to the holders of Class B Certificates;
(vi) Expected Distributions to the holders of Class C Certificates;
(vii) Expected Distributions to the holders of Class D Certificates;
(viii) Expected Distributions to the holders of Class E Certificates; and
(ix) certain fees and expenses of the Subordination Agent and the
Trustee. (Section 3.2)
[/R]
Upon the occurrence of a Triggering Event and at all times thereafter, all
funds received by the Subordination Agent in respect of the Equipment Notes and
certain other payments will be promptly distributed by the Subordination Agent
in the following order of priority:
(i) such amount necessary to reimburse (a) the Subordination Agent for
any out-of-pocket costs and expenses actually incurred by it in the
protection of, or the realization of value of, the Equipment Notes
or any Trust Indenture Estate, (b) each Trustee for any amounts of
the nature described in clause (a) above, and (c) each Liquidity
Provider or any Certificateholder for payments, if any, made by it
to the Subordination Agent or any Trustee in respect of amounts
described in clause (a) above (collectively, the "Administration
Expenses");
(ii) all accrued and unpaid Liquidity Expenses to each Liquidity
Provider;
(iii) all accrued and unpaid interest on the Liquidity Obligations as
provided in the Liquidity Facilities to each Liquidity Provider;
(iv) such amount necessary to the Liquidity Provider (a) to pay in full
all Liquidity Obligations, whether or not then due (other than
amounts payable pursuant to clauses (ii) and (iii) above) and/or (b)
if applicable, so long as no Performing Note Deficiency exists and
no Liquidity Event of
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<PAGE> 88
Default has occurred and is continuing, to replenish the Cash
Collateral Accounts up to their respective Required Amounts;
(v) such amount necessary to reimburse or pay (a) the Subordination
Agent for any tax (other than taxes imposed on compensation paid
under the Intercreditor Agreement), expense, fee, charge or other
loss incurred by or any other amount payable to the Subordination
Agent in connection with the transactions contemplated thereunder
(to the extent not previously reimbursed), (b) each Trustee for any
tax (other than taxes imposed on compensation paid under the
applicable Trust Agreement), expense, fee, charge, loss or any other
amount payable to such Trustee under the applicable Trust Agreements
(to the extent not previously reimbursed), and (c) each
Certificateholder for payments, if any, made by it in respect of
amounts described in clause (a) above, which 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 (a) through (c) above (collectively, "Certain Taxes and
Fees");
(vi) Adjusted Expected Distributions to the holders of Class A
Certificates;
(vii) Adjusted Expected Distributions to the holders of Class B
Certificates;
(viii) Adjusted Expected Distributions to the holders of Class C
Certificates;
(ix) Adjusted Expected Distributions to the holders of Class D
Certificates; and
(x) Adjusted Expected Distributions to the holders of Class E
Certificates (Section 3.3).
Interest Drawings under the Liquidity Facility and withdrawals from the
Cash Collateral Account, in each case in respect of interest on the Certificates
of any Trust (other than the Class D and Class E Trusts), will be distributed to
the Trustee for such Trust, notwithstanding the priority of distributions set
forth in the Intercreditor Agreement. All amounts on deposit in the Cash
Collateral Account for any Trust which are in excess of the Required Amount for
such Trust and all investment earnings on such amounts on deposit in the Cash
Collateral Account shall be deposited in an account maintained by the
Subordination Agent pursuant to the Intercreditor Agreement. (Section 3.6).
VOTING OF EQUIPMENT NOTES
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 related Indenture, Lease,
Refunding Agreement or other related document, if no Indenture Event of Default
with respect thereto 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. (Section
9.1(b)). The Trustee in turn will request directions from Certificateholders of
such Trust, provided that the Trustee is not required to request directions if
such consent will not adversely affect the Certificateholders or an Indenture
Event of Default shall have occurred and be continuing under the Pass Through
Agreement of such Trust. (Basic Agreement, Section 10.01) If any Indenture Event
of Default 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. ( Section 9.1(b))
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<PAGE> 89
THE SUBORDINATION AGENT
Fleet National Bank will be the Subordination Agent under the Intercreditor
Agreement. America West and its affiliates may from time to time enter into
banking and trustee relationships with the Subordination Agent and its
affiliates. The Subordination Agent's address is 777 Main Street, Hartford,
Connecticut 06115, Attention: Corporate Trust Administration.
The Subordination Agent may resign at any time by so notifying the Trustees
and the Liquidity Providers, in which event a successor Subordination Agent will
be promptly appointed. Either the Controlling Party or the Liquidity Provider
may remove the Subordination Agent for cause and appoint a successor
Subordination Agent. No resignation or removal of the Subordination Agent will
be effective until a successor is appointed. No appointment of a successor
Subordination Agent will be effective until the Rating Agencies have delivered
written confirmation that such action would not result in a downgrade,
withdrawal or suspension of the rating of any Class of Certificates. (Section
8.1)
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<PAGE> 90
DESCRIPTION OF THE EQUIPMENT AND THE APPRAISALS
THE EQUIPMENT
The Equipment is comprised of eight Airbus Industrie model A320-231
aircraft and three IAE model V2500-A1 engines. The Equipment is designed to be
in compliance with Stage III noise level standards, which constitute the most
restrictive Federal regulatory standards currently in effect in the United
States for aircraft noise abatement. The table below sets forth certain
additional information concerning the Equipment.
<TABLE>
<CAPTION>
APPRAISED VALUE
MANUFACTURER'S EQUIPMENT ENGINE DELIVERY ----------------------------------------------
SERIAL NUMBER TYPE TYPE DATE(1) AISI BK MBA
- -------------- ---------------- ---------- ------------------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C> <C>
55 Airbus A320-231 IAE V2500 September 25, 1989 $ 29,290,000 $ 29,900,000 $ 30,335,000
65 Airbus A320-231 IAE V2500 December 22, 1989 29,400,000 29,900,000 30,412,500
77 Airbus A320-231 IAE V2500 December 22, 1989 29,620,000 30,300,000 30,567,500
82 Airbus A320-231 IAE V2500 December 28, 1989 29,730,000 30,300,000 30,645,000
091 Airbus A320-231 IAE V2500 September 28, 1990 29,830,000 30,500,000 30,722,500
092 Airbus A320-231 IAE V2500 September 28, 1990 29,830,000 30,500,000 30,722,500
098 Airbus A320-231 IAE V2500 September 28, 1990 30,160,000 30,700,000 30,955,000
099 Airbus A320-231 IAE V2500 September 28, 1990 29,940,000 30,700,000 30,800,000
V0019 IAE V2500-A1 -- March 27, 1991 3,500,000 5,250,000 3,100,000
V0025 IAE V2500-A1 -- March 27, 1991 3,500,000 5,250,000 3,100,000
V0049 IAE V2500-A1 -- March 27, 1991 3,500,000 5,250,000 3,100,000
------------ ------------ ------------
$248,300,000 $258,550,000 $254,460,000
============= ============= =============
</TABLE>
- ---------------
(1) The delivery date indicated is for the purpose of the Leases. The original
delivery dates for the Aircraft and Spare Engines from the manufacturer were
in 1989 and 1990.
APPRAISED VALUE
The appraised values set forth in the foregoing chart were determined by BK
as of July 2, 1996, AISI as of July 11, 1996 and MBA as of July 12, 1996. As
part of this process, all three Appraisers performed "desktop" appraisals
without any physical inspection of the Equipment. The Appraisals are based on
differing assumptions and methodologies, which vary among the Appraisers. The
Appraisers have delivered letters setting forth their respective Appraisals,
copies of which are annexed to this Prospectus as Appendix II. For a discussion
of the assumptions and methodologies used in preparing each of the Appraisals,
reference is hereby made to such reports. The appraised value presented in this
Prospectus for each of the Spare Engines indicates a value for each such Spare
Engine that is less than the Notes Amount in respect of such Spare Engine. Two
of the Appraisers appraised each of the Spare Engines at a value lower than the
corresponding Notes Amount, while one Appraiser appraised each of the Spare
Engines at a value greater than the corresponding Notes Amount.
An appraisal is only an estimate of value and should not be relied upon as
a measure of realizable value. The proceeds realized upon a sale of any
Equipment may be less than the appraised value thereof. In addition, the value
of the Equipment in the event of the exercise of remedies under the applicable
Indenture will depend on market and economic conditions at the time, the
availability of buyers, the condition of the Equipment, whether the Equipment is
sold separately or as a block and other factors. Accordingly, there can be no
assurance that the proceeds realized upon any such exercise with respect to the
Equipment Notes and the Equipment pursuant to the applicable Indenture would be
as appraised or sufficient to satisfy in full remaining payments due on the
Equipment Notes issued thereunder or the Certificates.
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<PAGE> 91
DESCRIPTION OF THE EQUIPMENT NOTES
The following summary describes certain provisions of the Equipment Notes,
the Indentures, the Leases, the Owner Trust Agreements and the Refunding
Agreements. Forms of the Equipment Notes, the Indentures, the Leases and the
Refunding Agreements have been filed as exhibits to the Registration Statement.
In addition, forms of the Indentures, the Leases, and the Refunding Agreements
will be filed by America West with the Commission as exhibits to a Current
Report on Form 8-K. The statements under this caption are summaries and do not
purport to be complete. The summaries make use of terms defined in and are
qualified in their entirety by reference to all of the provisions of the
Equipment Notes, the Indentures, the Leases, the Owner Trust Agreements and the
Refunding Agreements. Except as otherwise indicated, the following summaries
relate to the Equipment Notes, the Indenture, the Lease, the Owner Trust
Agreement and the Refunding Agreement relating to each Aircraft and Spare
Engine. Section references in parentheses are to relevant sections of the
Indentures, the Leases, the Basic Agreement, and the Refunding Agreements.
GENERAL
The Equipment Notes with respect to each Aircraft and Spare Engine will be
issued in up to five series under a separate Indenture between the related Owner
Trustee, as trustee of the related Owner Trust created for the benefit of the
applicable Owner Participant who is the beneficial owner of the related
Equipment pursuant to a trust agreement (each, an "Owner Trust Agreement "), and
the related Indenture Trustee. The Equipment Notes issued will be nonrecourse
obligations of the applicable Owner Trust. All Equipment Notes issued under the
same Indenture will relate to, and be secured by, an item of Equipment, and such
Equipment will be leased to America West pursuant to a Lease between the Owner
Trustee under the applicable Owner Trust and America West. Each Equipment Note
will be authenticated under an Indenture by the applicable Indenture Trustee.
The Chase Manhattan Bank will act as Indenture Trustee with respect to the issue
of Equipment Notes relating to four of the Aircraft, and Fleet National Bank
will act as Indenture Trustee with respect to the issue of Equipment Notes
relating to four of the Aircraft and the three Spare Engines.
Under each Lease, until the lien of the related indenture is discharged,
America West will be unconditionally obligated to make or cause to be made
rental and other payments to the related Indenture Trustee on behalf of the
related Owner Trustee, which rental and other payments will be at least
sufficient to pay in full when due all scheduled payments required to be made on
the Equipment Notes issued with respect to the related Equipment. The rental
obligations of America West under each Lease will be general obligations of
America West. However, the Equipment Notes will not be obligations of, or
guaranteed by, America West.
SUBORDINATION
Series B Equipment Notes issued in respect of any Equipment will be
subordinated in right of payment to Series A Equipment Notes issued in respect
of such Equipment; Series C Equipment Notes issued in respect of such Equipment
will be subordinated in right of payment to Series A and B Equipment Notes
issued in respect of such Equipment; Series D Equipment Notes issued in respect
of such Equipment will be subordinated in right of payment to Series A, B and C
Equipment Notes issued in respect of such Equipment; and Series E Equipment
Notes issued in respect of such Equipment will be subordinated in right of
payment to Series A, B, C and D Equipment Notes issued in respect of such
Equipment. On each Equipment Note payment date, (i) payments of interest and
principal due on Series A Equipment Notes issued in respect of any Equipment
will be made prior to payments of interest and principal due on any Series B, C,
D and E Equipment Notes issued in respect of such Equipment, (ii) payments of
interest and principal due on Series B Equipment Notes will be made prior to
payments of interest and principal due on any Series C, D and E Equipment Notes
issued in respect of such Equipment, (iii) payments of interest and principal
due on Series C Equipment Notes will be made prior to payments of interest and
principal due on any Series D and E Equipment Notes issued in respect of such
Equipment and (iv) payments of interest and principal due on Series D Equipment
Notes will be made prior to payments of interest and principal due on any Series
E Equipment Notes issued in respect of such Equipment.
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<PAGE> 92
Only Equipment Notes having the same priority of payment may be held by the
same Trust; accordingly all of the Series A Equipment Notes will be held by the
Class A Trust, all of the Series B Equipment Notes will be held by the Class B
Trust, all of the Series C Equipment Notes will be held by the Class C Trust,
all of the Series D Equipment Notes will be held by the Class D Trust, and all
of the Series E Equipment Notes will be held by the Class E Trust.
PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, interest paid on
the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus until the principal balance of such
Certificates has been reduced to zero. Subject to the provisions of the
Intercreditor Agreement, scheduled principal payments made on the Equipment
Notes held in each Trust will be passed through to the Certificateholders of
each such Trust in accordance with the principal repayment schedule set forth
herein until the principal balance of such Certificates has been reduced to
zero. See "Description of the Intercreditor Agreement -- Priority of
Distributions".
The aggregate original principal amounts of the Equipment Notes to be
issued with respect to each Aircraft and Spare Engine, as such Equipment Notes
will be held in each of the Trusts, are as follows:
<TABLE>
<CAPTION>
MANUFACTURER'S CLASS A TRUST CLASS B TRUST CLASS C TRUST CLASS D TRUST CLASS E TRUST
SERIAL NUMBER EQUIPMENT NOTES* EQUIPMENT NOTES* EQUIPMENT NOTES* EQUIPMENT NOTES* EQUIPMENT NOTES*
- -------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
55 $ 11,936,667 $4,476,250 $4,476,250 $2,288,833 $ 0
65 11,936,667 4,476,250 4,476,250 3,575,833 0
77 11,936,667 4,476,250 4,476,250 3,575,833 0
82 12,090,000 4,533,750 4,533,750 1,711,567 0
091 12,140,333 4,552,625 4,552,625 4,249,117 2,159,946
092 12,140,333 4,552,625 4,552,625 4,249,117 2,159,946
098 12,140,333 4,552,625 4,552,625 4,249,117 2,159,946
099 12,140,333 4,552,625 4,552,625 4,249,117 2,159,946
V0019 1,400,000 525,000 525,000 367,114 1,504,354
V0025 1,400,000 525,000 525,000 367,114 1,504,354
V0049 1,400,000 525,000 525,000 367,114 1,504,354
---------------- ---------------- ---------------- ---------------- ----------------
Total $100,661,333 $37,748,000 $37,748,000 $29,249,875 $13,152,846
============== ============== ============== ============== ==============
<CAPTION>
MANUFACTURER'S
SERIAL NUMBER TOTAL*
- -------------- -----------
<S> <C>
55 $23,178,000
65 24,465,000
77 24,465,000
82 22,869,067
091 27,654,646
092 27,654,646
098 27,654,646
099 27,654,646
V0019 4,321,468
V0025 4,321,468
V0049 4,321,468
-----------
Total $218,560,054
=============
</TABLE>
- ---------------
* The information relating to the principal amount of the Equipment Notes is
indicative only and subject to change.
Interest will be payable on the unpaid principal amount of each Equipment
Note at the rate applicable to such Equipment Note on January 2 and July 2 in
each year, commencing January 2, 1997. Such interest will be computed on the
basis of a 360-day year of twelve 30-day months. Overdue amounts of principal
and interest on each Series of Equipment Notes will bear interest at a rate
equal to 1% per annum over the applicable rate on such Series of Equipment
Notes. The principal of the Equipment Notes purchased by each Trust will be
payable on the dates and in the amounts set forth in Appendix III.
The final payment made under each Equipment Note is provided to be in an
amount sufficient to discharge in full the unpaid principal amount of, all
accrued and unpaid interest on, and any other amounts due under, such Equipment
Note. (Indentures, Section 2.02)
If any date on which a payment under the Equipment Notes becomes due and
payable is not a business day, such payment will be made on the next succeeding
business day without any additional interest.
All payments of the principal amount of, interest on and all other amounts
due with respect to an Equipment Note will be payable only from the income and
proceeds from the collateral pledged pursuant to the related Indenture (the
"Trust Indenture Estate"). (Indentures, Section 2.03) In the case of each
Equipment Note, each payment of principal amount and interest or other amounts
due thereon will be applied in the following order: (i) to the payment of
accrued interest on such Equipment Note (as well as any interest on any overdue
principal amounts, any overdue interest and any other overdue amounts
thereunder) to the
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<PAGE> 93
date of such payment; (ii) to the payment of the principal amount of such
Equipment Note (or a portion thereof) then due thereunder; (iii) to the payment
of Make-Whole Amount, if any, and any other amount due under the related
Indenture or under such Equipment Note; and (iv) the balance, if any, remaining
thereafter, to the payment of the principal amount of such Equipment Note
remaining unpaid (applied to the installments of principal amount in the inverse
order of their normal maturity). (Indentures, Section 2.05)
REDEMPTION
The Equipment Notes issued with respect to any Equipment will be redeemed,
in whole, in each case at a price equal to the aggregate unpaid principal amount
thereof together with accrued interest thereon to, but not including, the date
of redemption, and all other amounts payable under the related Indenture or
Refunding Agreement but without any Make-Whole Amount, upon the occurrence of an
Event of Loss with respect to such Equipment if such Equipment is not replaced
by America West under the related Lease. (Indentures, Section 2.10)
Either the Owner Trustee or the Owner Participant may purchase all, but not
less than all, of the outstanding Equipment Notes issued under the related
Indentures at a price equal to the aggregate unpaid principal amount thereof,
plus accrued and unpaid interest thereon to, but not including, the date of
purchase and all other amounts then payable under the related Indenture or
Refunding Agreement but without any Make-Whole Amount (except as described in
the second following sentence). This option may be exercised (i) upon the
Indenture Trustee with respect to the related Equipment Notes taking action, or
notifying the applicable Owner Trustee that it intends to take action to
foreclose the lien of the related Indenture or otherwise commence the exercise
of any significant remedy under such Indenture or the related Lease, (ii) upon
the Equipment Notes with respect to an Aircraft or a Spare Engine having been
accelerated or (iii) in the event there shall have occurred and be continuing a
Lease Event of Default. If such option is exercised at a time when a Lease Event
of Default shall have occurred and be continuing for less than 120 days (and the
events described in clauses (i) and (ii) of the preceding sentence do not
apply), then the Make-Whole Amount will be added to the purchase price.
(Indentures, Section 2.12)
"Make-Whole Amount" means, with respect to any Equipment Note, the amount
(as determined by an independent investment banker selected by America West and
reasonably acceptable to the related Indenture Trustee and 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 such payments on a semi-annual 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. (Indentures, Section 1.01)
For purposes of determining the Make-Whole Amount, "Treasury Yield " means,
at the time of determination with respect to any Equipment Note, the interest
rate (expressed as a semi-annual equivalent and as a decimal and, in the case of
United States Treasury bills, converted to a bond equivalent yield) determined
to be the per annum rate equal to the semi-annual yield to maturity for United
States Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities markets either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in 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
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<PAGE> 94
H.15 (519) published prior to the close of business on the third business day
prior to the applicable redemption date. (Indentures, Section 1.01)
"Average Life Date" for any Equipment Note is 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" with
respect to any Equipment Note, at the redemption date of such Equipment Note, is
the number of days equal to the quotient obtained by dividing (a) the sum of
each of the products obtained by multiplying (i) the amount of each then
remaining scheduled payment of principal of such Equipment Note, including the
payment due on the maturity date of such Equipment Note, by (ii) the number of
days from and including such redemption date to but excluding the date on which
payment of principal is scheduled to be made; by (b) the then outstanding
principal amount of such Equipment Note. (Indentures, Section 1.01)
SECURITY
The Equipment Notes issued with respect to each Aircraft and Spare Engine
will be secured by a perfected security interest in such Aircraft or Spare
Engine and an assignment to the related Indenture Trustee of certain of the
Owner Trustee's rights under the related Lease, including the right to receive
certain payments of rent thereunder, all profits, revenues and other income of
such Aircraft or Spare Engine, all required hull insurance and similar proceeds
with respect to such Aircraft or Spare Engine, all monies and securities
deposited with the related Indenture Trustee, and all proceeds of the foregoing.
Basic Rent (as defined herein) payments for each Aircraft and Spare Engine are
payable semi-annually on each Basic Rent payment date. Such payments, together
with certain other payments that America West is obligated to make or cause to
be made under the related Lease, have been assigned by the Owner Trustee under
the related Indenture to provide the funds necessary to make payments of
principal and interest due or expected to be due from the Owner Trustee on the
Equipment Notes issued under such Indenture and Liquidity Obligations under the
related Liquidity Facility. The balance of any such Basic Rent and other
payments, after payment of amounts due on the related Equipment Notes and
certain other amounts, including certain amounts owing to the Liquidity
Provider, will be paid over to the related Owner Participant. (Indentures,
Sections 3.01 and 3.06)
Under the terms of each Lease, America West's obligations in respect of
each Aircraft and Spare Engine will be those of a lessee under a "net lease".
Accordingly, America West will be obligated, among other things and at its
expense, to cause each Aircraft to be duly registered, to pay all costs of
operating the Equipment and to maintain, service, repair and overhaul (or cause
to be maintained, serviced, repaired and overhauled) the Equipment. Unless an
Indenture Event of Default with respect to an item of Equipment has occurred and
is continuing, the related Indenture Trustee may not exercise the Owner
Trustee's rights under the related Lease except such Owner Trustee's right to
receive rent. The assignment by the Owner Trustee to the Indenture Trustee of
its rights under the related Lease excludes certain rights of the Owner Trustee
and the Owner Participant, including the rights of the Owner Trustee, the Owner
Participant and their respective affiliates relating to the proceeds of certain
letters of credit issued for the account of America West referred to under "The
Leases -- Lease Events of Default" in the amount of $1 million in the case of
each Aircraft Lease and $200,000 in the case of each Spare Engine Lease in
respect of certain amounts which may become payable by America West, indemnity
payments and interest in respect thereof payable by America West for certain
matters, insurance proceeds payable to Wilmington Trust Company, in its
individual capacity and not as Owner Trustee (the "Trust Company"), the
Indenture Trustee in its individual capacity and to the Owner Participant under
public liability insurance maintained in respect of the Aircraft, insurance
proceeds payable to the Trust Company or to such Owner Participant under certain
insurance maintained by or for the benefit of the Owner Participant (whether
directly or through the Owner Trustee) and certain costs and expenses payable by
America West to the Trust Company, the Owner Trustee, the Indenture Trustee or
such Owner Participant. (Indenture, Granting Clause and Section 1.01) The
Equipment Notes are not cross-collateralized, and consequently the Equipment
Notes issued in respect of any one item of Equipment are not secured by any of
the other Equipment (as described in "-- The Leases -- Events of Loss") or the
Leases related thereto.
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<PAGE> 95
Subject to the right of America West to re-register the Aircraft in other
jurisdictions, and subject to the cooperation of the applicable Owner Trustee
and Indenture Trustee, America West will keep each Aircraft registered under the
Federal Aviation Act and will record the Indenture and the Lease and other
relevant documents with respect to each Aircraft and Spare Engine under the
Federal Aviation Act. Such recordation of the Indenture, the Lease and other
relevant documents with respect to each Aircraft and Spare Engine will give the
related Indenture Trustee a perfected security interest in the related Equipment
whenever it is located in the United States or any of its territories and
possessions.
In addition, the Convention on the International Recognition of Rights in
Aircraft (the "Convention") provides that such security interest will also be
recognized, with certain limited exceptions, in those jurisdictions that have
ratified or adhere to the Convention. Each Aircraft may also be registered under
the laws of, and each Aircraft and Spare Engine may be operated by America West
or be under sublease or interchange arrangements in, countries that are not
parties to the Convention. The extent to which the related Indenture Trustee's
security interest would be recognized in Equipment registered under the laws of
or located in a country that is not a party to the Convention is uncertain.
Moreover, in the case of an Indenture Event of Default, the ability of the
related Indenture Trustee to realize upon its security interest in an Aircraft
or a Spare Engine could be adversely affected as a legal or practical matter if
such Equipment were registered under the laws of any jurisdiction other than the
United States or located outside the United States.
Certain of the Aircraft are subject to Cross-Border Leases. In connection
with the realization by the Indenture Trustee of its security interest in such
Aircraft, it may be desirable to have such Cross-Border Leases terminated. See
"-- Cross-Border Leases".
Funds, if any, held from time to time by an Indenture Trustee with respect
to any Equipment, including funds held as the result of an Event of Loss to such
Equipment or termination of the Lease, if any, relating thereto, will be
invested and reinvested by such Indenture Trustee. Such investment and
reinvestment will be at the direction of the related Owner Trustee or, in the
event the Owner Trustee shall so specify, by the Lessee, in certain investments
described in the related Indenture. (Indentures, Section 3.07) The net amount of
any gain or loss resulting from any such investments will be for the account of
America West.
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following table sets forth LTV Ratios for the Equipment Notes issued in
respect of each Aircraft and Spare Engine as of the dates specified and was
obtained by dividing (i) the outstanding balance (assuming no payment default)
of such Equipment Notes determined immediately after giving effect to the
payments scheduled to be made on each such date by (ii) the assumed value (the
"Assumed Equipment Value") of the Equipment securing such Equipment Notes.
The tables contain forward-looking information that is based on the
assumption that the value of each Aircraft and Spare Engine included in the
Assumed Equipment Value opposite November , 1996 depreciates by 2% per year
until the fifteenth year after the year of delivery of such Equipment by the
manufacturers, by 4% per year thereafter until the twentieth year after the year
of such delivery and by 6% per year thereafter. Other rates or methods of
depreciation would result in materially different LTV Ratios and no assurance
can be given (i) that the depreciation rates and methods assumed for the
purposes of the table are the ones most likely to occur or (ii) as to the actual
value of any Equipment. Thus the table should not be considered a forecast or
prediction of expected or likely LTV Ratios but simply a mathematical
calculation based on one set of assumptions.
94
<PAGE> 96
<TABLE>
<CAPTION>
AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL
NUMBER 55 NUMBER 65 NUMBER 77
---------------------------------- ---------------------------------- ----------------------------------
EQUIPMENT EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED NOTE ASSUMED
OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT
BALANCE* VALUE LTV BALANCE* VALUE LTV BALANCE* VALUE LTV
DATE (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO*
- ------------------- ----------- ---------- ------- ----------- ---------- ------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 26,
1996.............. $ 23.18 $29.84 77.7% $ 24.46 $29.90 81.8% $ 24.46 $30.16 81.1%
July 2, 1997....... 20.75 29.24 71.0 22.12 29.30 75.5 22.12 29.56 74.8
July 2, 1998....... 18.80 28.65 65.6 20.30 28.70 70.7 20.30 28.96 70.1
July 2, 1999....... 16.68 28.05 59.5 18.30 28.11 65.1 18.30 28.35 64.6
July 2, 2000....... 14.39 27.45 52.4 16.15 27.51 58.7 16.15 27.75 58.2
July 2, 2001....... 11.93 26.86 44.4 13.82 26.91 51.4 13.82 27.15 50.9
July 2, 2002....... 9.28 26.26 35.3 11.31 26.31 43.0 11.31 26.54 42.6
July 2, 2003....... 6.42 25.66 25.0 8.61 25.71 33.5 8.61 25.94 33.2
July 2, 2004....... 3.36 25.07 13.4 5.71 25.12 22.7 5.71 25.34 22.5
July 2, 2005....... 0.07 23.87 0.3 2.59 23.92 10.8 2.59 24.13 10.7
July 2, 2006....... 0.00 NA NA 0.00 NA NA 0.00 NA NA
July 2, 2007....... 0.00 NA NA 0.00 NA NA 0.00 NA NA
July 2, 2008....... 0.00 NA NA 0.00 NA NA 0.00 NA NA
July 2, 2009....... 0.00 NA NA 0.00 NA NA 0.00 NA NA
</TABLE>
<TABLE>
<CAPTION>
AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL
NUMBER 82 NUMBER 091 NUMBER 092
---------------------------------- ---------------------------------- --------------------------------
EQUIPMENT EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED NOTE ASSUMED
OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT
BALANCE* VALUE LTV BALANCE* VALUE LTV BALANCE* VALUE LTV
DATE (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO*
- --------------------- ----------- ---------- ------- ----------- ---------- ------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 26, 1996.... $ 22.87 $30.23 75.7% $ 27.65 $30.35 91.1% $ 27.65 $30.35 91.1 %
July 2, 1997......... 21.75 29.62 73.4 26.53 29.74 89.2 26.53 29.74 89.2
July 2, 1998......... 19.77 29.02 68.1 24.55 29.14 84.2 24.55 29.14 84.2
July 2, 1999......... 17.63 28.41 62.0 22.36 28.53 78.4 22.36 28.53 78.4
July 2, 2000......... 15.31 27.81 55.1 19.95 27.92 71.5 19.95 27.92 71.5
July 2, 2001......... 14.64 27.20 53.8 17.33 27.32 63.4 17.33 27.32 63.4
July 2, 2002......... 14.63 26.60 55.0 14.51 26.71 54.3 14.51 26.71 54.3
July 2, 2003......... 14.30 25.99 55.0 14.51 26.10 55.6 14.51 26.10 55.6
July 2, 2004......... 13.52 25.39 53.3 12.36 25.49 48.5 12.36 25.49 48.5
July 2, 2005......... 10.89 24.18 45.0 10.79 24.89 43.4 10.79 24.89 43.4
July 2, 2006......... 8.05 22.97 35.1 7.47 23.67 31.6 7.47 23.67 31.6
July 2, 2007......... 5.00 21.76 23.0 3.91 22.46 17.4 3.91 22.46 17.4
July 2, 2008......... 1.73 20.55 8.4 0.08 21.25 0.4 0.08 21.25 0.4
July 2, 2009......... 0.00 NA NA 0.00 NA NA 0.00 NA NA
</TABLE>
- ---------------
* The information relating to Equipment Note outstanding balance for each item
of Equipment and resulting LTV Ratios is indicative only and subject to
change.
95
<PAGE> 97
<TABLE>
<CAPTION>
AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL
NUMBER 098 NUMBER 099
---------------------------------- --------------------------------
EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED
OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT
BALANCE* VALUE LTV BALANCE* VALUE LTV
DATE (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO*
- --------------------------------------------------- ----------- ---------- ------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
November 26, 1996.................................. $ 27.65 $30.61 90.4% $ 27.65 $30.48 90.7 %
July 2, 1997....................................... 26.53 29.99 88.5 26.53 29.87 88.8
July 2, 1998....................................... 24.55 29.38 83.5 24.55 29.26 83.9
July 2, 1999....................................... 22.36 28.77 77.7 22.36 28.65 78.0
July 2, 2000....................................... 19.95 28.16 70.9 19.95 28.04 71.2
July 2, 2001....................................... 17.33 27.54 62.9 17.33 27.43 63.2
July 2, 2002....................................... 14.51 26.93 53.9 14.51 26.82 54.1
July 2, 2003....................................... 14.51 26.32 55.1 14.51 26.21 55.4
July 2, 2004....................................... 12.36 25.71 48.1 12.36 25.60 48.3
July 2, 2005....................................... 10.79 25.10 43.0 10.79 24.99 43.2
July 2, 2006....................................... 7.47 23.87 31.3 7.47 23.77 31.4
July 2, 2007....................................... 3.91 22.65 17.2 3.91 22.56 17.3
July 2, 2008....................................... 0.08 21.42 0.4 0.08 21.34 0.4
July 2, 2009....................................... 0.00 NA NA 0.00 NA NA
</TABLE>
<TABLE>
<CAPTION>
ENGINE MANUFACTURER'S SERIAL ENGINE MANUFACTURER'S SERIAL ENGINE MANUFACTURER'S SERIAL
NUMBER V0019 NUMBER V0025 NUMBER V0049
---------------------------------- ---------------------------------- ----------------------------------
EQUIPMENT EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED NOTE ASSUMED
OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT OUTSTANDING EQUIPMENT
BALANCE* VALUE LTV BALANCE* VALUE LTV BALANCE* VALUE LTV
DATE (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO* (MILLIONS) (MILLIONS) RATIO*
- ------------------- ----------- ---------- ------- ----------- ---------- ------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 26,
1996............. $4.32 $ 3.50 123.5% $4.32 $ 3.50 123.5% $4.32 $ 3.50 123.5%
July 2, 1997....... 4.15 3.43 121.0 4.15 3.43 121.0 4.15 3.43 121.0
July 2, 1998....... 3.86 3.36 114.8 3.86 3.36 114.8 3.86 3.36 114.8
July 2, 1999....... 3.54 3.29 107.5 3.54 3.29 107.5 3.54 3.29 107.5
July 2, 2000....... 3.18 3.22 98.7 3.18 3.22 98.7 3.18 3.22 98.7
July 2, 2001....... 2.78 3.15 88.2 2.78 3.15 88.2 2.78 3.15 88.2
July 2, 2002....... 2.34 3.08 76.1 2.34 3.08 76.1 2.34 3.08 76.1
July 2, 2003....... 1.87 3.01 62.2 1.87 3.01 62.2 1.87 3.01 62.2
July 2, 2004....... 1.54 2.94 52.5 1.54 2.94 52.5 1.54 2.94 52.5
July 2, 2005....... 1.54 2.87 53.8 1.54 2.87 53.8 1.54 2.87 53.8
July 2, 2006....... 1.28 2.73 46.7 1.28 2.73 46.7 1.28 2.73 46.7
July 2, 2007....... 1.21 2.59 46.6 1.21 2.59 46.6 1.21 2.59 46.6
July 2, 2008....... 0.63 2.45 25.5 0.63 2.45 25.5 0.63 2.45 25.5
July 2, 2009....... 0.00 NA NA 0.00 NA NA 0.00 NA NA
</TABLE>
- ---------------
* The information relating to Equipment Note outstanding balance for each item
of Equipment and resulting LTV Ratios is indicative only and subject to
change.
LIMITATION OF LIABILITY
The Equipment Notes will not be obligations of, or guaranteed by, America
West, the Owner Participants or the Owner Trustees in their individual capacity.
None of the Owner Trustees, the Owner Participants or the Indenture Trustees, or
any affiliates thereof, will be personally liable to any holder of an Equipment
Note or, in the case of the Owner Trustees and the Owner Participants, to the
Indenture Trustees for any amounts payable under the Equipment Notes or, except
with respect to the Owner Trustee as provided in each Indenture, for any
liability under such Indenture. All payments of principal amount of, interest
on, and all other amounts due with respect to an Equipment Note will be payable
only from the related Trust Indenture Estate. (Indentures, Section 2.03)
Except as otherwise provided in the Indentures, each Owner Trustee in its
individual capacity will not be answerable or accountable under the Indentures
or under the Equipment Notes under any circumstances except for its own willful
misconduct, gross negligence, the inaccuracy of a representation or warranty
when made or the failure to perform certain specified covenants. None of the
Owner Participants will have any duty or responsibility under any of the
Indentures or the Equipment Notes to the Indenture Trustees or to any holder of
any Equipment Note.
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<PAGE> 98
INDENTURE EVENTS OF DEFAULT; NOTICE AND WAIVER
Indenture Events of Default under each Indenture will include: (a) the
occurrence and continuance of any Lease Event of Default under the related Lease
(other than the failure to make certain indemnity payments and other payments to
the related Trust Company, Owner Trustee, Indenture Trustee or Owner
Participant), (b) the failure by the Owner Trustee (other than as a result of a
Lease Default) to pay any amount when due under such Indenture or under any
Equipment Note issued thereunder and such failure shall have continued for, in
the case of principal and interest, ten calendar days and in all other cases
fifteen calendar days after notice thereof being given to the Owner Trustee from
the Indenture Trustee or any holder of the Equipment Notes, (c) the failure by
the Owner Participant, the Trust Company or the Owner Trustee to discharge
certain liens, continued for a period of thirty calendar days after an officer
of the Trust Company or of the Owner Participant with responsibility for or
familiarity with the transactions contemplated under the related Indenture or
Refunding Agreement (or any vice president) shall have actual knowledge of such
lien, (d) any representation or warranty made by the related Owner Trustee,
Trust Company or Owner Participant in such Indenture or the related Refunding
Agreement or by any person guaranteeing or supporting the obligations of the
Owner Participant under certain related documents or in any related guarantee or
support agreement being false or incorrect when made and in any respect
materially adverse to the rights and interests of the holders of the related
Equipment Notes and remaining unremedied after notice and specified cure
periods, (e) certain failures by the related Owner Trustee, Trust Company or
Owner Participant to perform or observe certain covenants or obligations for the
benefit of the Indenture Trustee or holders of Equipment Notes under such
Indenture or the related Refunding Agreement that are not remedied after notice
and specified cure periods, (f) the occurrence of certain events of bankruptcy,
reorganization or insolvency of the related Owner Trustee or Owner Participant
or (g) any time when the related Aircraft shall be registered in a jurisdiction
outside the United States and the related Owner Trustee, the Trust Company or
the Owner Participant shall breach certain covenants agreed upon pursuant to the
related Refunding Agreement as a result of which the lien of the related
Indenture shall cease to be a valid and duly perfected lien on the related Trust
Indenture Estate. (Indentures, Section 4.02) There will not be any cross-default
provisions in the Indentures or the Leases. Consequently, events resulting in an
Indenture Default under any particular Indenture may or may not result in an
Indenture Event of Default occurring under any other Indenture.
The Indenture Trustee will give the holders of the Equipment Notes, the
Owner Trustee, America West and the Owner Participant prompt written notice of
any Indenture Event of Default of which the Indenture Trustee has knowledge.
(Indentures, Section 5.01) If an Indenture Event of Default shall have occurred
and be continuing, the Indenture Trustee may exercise certain rights and powers
as enumerated under the related Indenture; if such Indenture Event of Default is
a Lease Event of Default, the Indenture Trustee may exercise certain remedies
pursuant to the related Lease, provided that such Indenture Trustee gives (i)
ten days' written notice to the related Owner Trustee and the Owner Participant
prior to the initial exercise of such remedies under the related Lease (if not
stayed or otherwise precluded by applicable law from giving such notice) and
(ii) twenty days' written notice to the related Owner Trustee and the Owner
Participant of its intention to sell the related Aircraft. See "-- Remedies"
below. (Indentures, Section 4.04)
In the event that America West fails to pay any installment of Basic Rent
(as defined herein) due under the related Lease, the Owner Participant may,
within a specified period after notice of such default, pay a sum equal to the
amount of all, but not less than all of the principal amount and interest due
and payable on the Equipment Notes (without regard to any acceleration thereof),
unless America West shall have theretofore failed to pay Basic Rent in the
manner required under the related Lease as to each of the three immediately
preceding Basic Rent payment dates or in the aggregate more than six Basic Rent
payment dates. In the event that America West defaults in any obligation under
the related Lease (other than the payment of Basic Rent) and such default can be
remedied by the payment of money, the Owner Participant may, within a specified
period after notice of such default, instruct the Owner Trustee to exercise the
Owner Trustee's rights under the related Lease to perform such obligation on
behalf of America West. In the event such Lease Event of Default shall have been
so remedied, then any declaration that the Lease is in default and that the
related Equipment Notes are due and payable 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 be subrogated to the rights of the holders of
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<PAGE> 99
the Equipment Notes to receive the applicable payment from the Indenture
Trustee. (Indentures, Section 4.03)
The holders of a majority in principal amount of the outstanding Equipment
Notes issued with respect to any Equipment, by notice to the Indenture Trustee,
may on behalf of all the holders waive any existing default and its consequences
under the Indenture with respect to such Equipment, except a default in the
payment of the principal amount of, or interest on, any such Equipment Notes or
a default in respect of certain other covenants or provisions of such Indenture
that cannot be modified or amended without the consent of each holder of
Equipment Notes affected thereby. (Indentures, Section 4.08)
REMEDIES
Each Indenture will provide that if an Indenture Event of Default occurs
and is continuing, the related Indenture Trustee may, and upon receipt of
written demand from the holders of a majority in aggregate unpaid principal
amount of the Equipment Notes outstanding under such Indenture shall, subject to
the applicable Owner Participant's or Owner Trustee's right to cure, as
discussed above, declare the unpaid principal amount of all such Equipment Notes
issued thereunder immediately due and payable, together with all accrued but
unpaid interest thereon (without a Make-Whole Amount); provided, however, that
such principal and interest will immediately and without further act become due
and payable upon the occurrence of certain events of bankruptcy, reorganization
or insolvency with respect to the related Owner Trustee, the related Owner
Participant or America West. The holders of a majority in aggregate unpaid
principal amount of Equipment Notes outstanding under such Indenture may rescind
any such declaration at any time before the judgment or decree for the payment
of the money so due shall be entered if (i) there has been paid to the related
Indenture Trustee an amount sufficient to pay all overdue principal amount of
and interest on any such Equipment Notes, to the extent such amounts have become
due otherwise than by such declaration of acceleration and (ii) all other
Indenture Events of Default and potential Indenture Events of Default with
respect to any covenant or provision of such Indenture have been cured or
waived. (Indentures, Section 4.04)
Each Indenture will provide that if an Indenture Event of Default under
such Indenture has occurred and is continuing, the related Indenture Trustee may
exercise certain rights or remedies available to it under such Indenture or
under applicable law, including (if the corresponding Lease has been declared in
default) one or more of the remedies under such Indenture or such Lease with
respect to the Equipment subject to such Lease. If there shall have occurred or
be continuing a Lease Event of Default, the related Indenture Trustee's right to
exercise remedies under such Indenture will be subject, with certain exceptions,
to its having proceeded to exercise one or more of the remedies under the Lease
to terminate the Lease or take possession of and/or sell the Equipment; provided
that the requirement to exercise such remedies under such Lease shall not apply
in circumstances where such exercise has been stayed or prohibited by applicable
law or court order 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 (plus
an additional period, if any, resulting from (i) the trustee or the
debtor-in-possession in such proceeding agreeing to perform its obligations
under such Lease with the approval of the applicable court, (ii) such Indenture
Trustee's consent to an extension of such 60-day period, (iii) America West's
assumption during such 60-day period with the approval of the relevant court of
the related Lease pursuant to Section 365 of the Bankruptcy Code or (iv) such
Indenture Trustee's own failure to give any requisite notice (unless such
Indenture Trustee is stayed or otherwise precluded by applicable law from giving
such notice)). (Indentures, Section 4.04(a)) Except as otherwise provided, such
remedies may be exercised by the related Indenture Trustee to the exclusion of
the related Owner Trustee, subject to certain conditions specified in such
Indenture, and of America West, subject to the terms of such Lease. Any
Equipment sold in the exercise of such remedies will be free and clear of any
rights of those parties, including the rights of America West under the Lease
with respect to such Equipment. (Indentures, Section 4.04; Leases, Section 18)
If the Equipment Notes issued in respect of one or more Aircraft or Spare
Engine are in default and the Equipment Notes issued in respect of the remaining
Equipment are not in default, no remedies will be exercisable under the
applicable Indentures with respect to such remaining Equipment.
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<PAGE> 100
Pursuant to each Indenture, notwithstanding any of the provisions of such
Indenture or the related Owner Trust Agreement to the contrary, each holder of
the related Equipment Notes, the related Indenture Trustee and the related Owner
Trustee will agree for the benefit of America West that it will not take any
action contrary to America West's rights under the related Lease, including the
right of America West to possession and use and quiet enjoyment of the related
Equipment, except in accordance with the provisions of such Lease. (Indentures,
Section 10.05)
Section 1110 of the Bankruptcy Code provides that the right of lessors,
conditional vendors and holders of security interests with respect to
"equipment" (as defined in Section 1110 of the Bankruptcy Code) to take
possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by (a) the automatic stay provision of the Bankruptcy Code, which
provision enjoins repossessions by creditors for the duration of the
reorganization period, (b) the provision of the Bankruptcy Code allowing the
trustee in reorganization to use property of the debtor during the
reorganization period, (c) Section 1129 of the Bankruptcy Code (which governs
the confirmation of plans of reorganization in Chapter 11 cases) and (d) any
power of the bankruptcy court to enjoin a repossession. Section 1110 of the
Bankruptcy Code provides, however, that the right to take possession of
equipment may not be exercised for 60 days following the date of commencement of
the reorganization proceedings and may not be exercised at all after such 60-day
period (or such longer period consented to by the lessor, conditional vendor or
holder of a security interest), if the trustee in reorganization agrees to
perform the debtor's obligations that become due on or after such date and cures
all existing defaults and within 30 days thereof, any future defaults (other
than defaults resulting solely from the financial condition, bankruptcy,
insolvency or reorganization of the debtor). "Equipment" is defined in Section
1110 of the Bankruptcy Code, in part, as "an aircraft, aircraft engine,
propeller, appliance, or spare part (as defined in section 40102 of title 49)
that is subject to a security interest granted by, leased to, or conditionally
sold to a debtor that is a citizen of the United States (as defined in section
40102 of title 49) holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo".
The Bankruptcy Reform Act amended Section 1110 by, among other things,
providing that all lessors of equipment first placed in service after the date
of enactment of that Act will be entitled to the benefits of Section 1110 even
if such lease is in essence a security interest. The Bankruptcy Reform Act also
provides that the lessor under a lease of equipment first placed in service on
or prior to the date of the enactment of that Act will be entitled to the
benefits of Section 1110 if the lessor and the lessee have expressed in the
applicable agreement or in a substantially contemporaneous writing that the
applicable agreement is to be treated as a lease for federal income tax
purposes. Each of the Leases relating to Equipment placed in service prior to
the enactment of the Bankruptcy Reform Act contains such a written statement.
Milbank, Tweed, Hadley & McCloy, counsel to the Underwriters, has advised
the Indenture Trustees that, if America West were to become a debtor under
Chapter 11 of the Bankruptcy Code, the applicable Owner Trustee, as lessor under
each Lease, and the related Indenture Trustee, as assignee of such Owner
Trustee's rights under such Lease pursuant to such related Indenture, would be
entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to
the airframe and engines comprising the related Aircraft or with respect to the
related Spare Engine. This opinion is subject to certain qualifications and
assumptions, including the assumption that America West is and will be a citizen
of the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the U.S. Code
for aircraft capable of carrying ten or more individuals or 6,000 pounds or more
of cargo and the assumption that the applicable Aircraft or Spare Engine has a
useful life in excess of the term of the related Lease, without giving effect to
any optional renewal period during which fair market rent would be paid (which
assumption will be supported by a letter to such effect issued by one of the
Appraisers). See "-- The Leases -- Events of Loss". The opinion of Milbank,
Tweed, Hadley & McCloy will not address the availability of Section 1110 with
respect to the bankruptcy proceedings of any possible sublessee of Equipment
which may be subleased by America West. The opinion of Milbank, Tweed, Hadley &
McCloy will not address the possible substitution or replacement of Equipment
after an Event of Loss in the future, the consummation of which is conditioned
upon the contemporaneous delivery of an opinion of counsel to the
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effect that the related Indenture Trustee's entitlement to Section 1110 benefits
should not be diminished as a result of such substitution or replacement. For a
description of certain limitations on the Indenture Trustee's exercise of rights
contained in the Indentures, see "-- Indenture Events of Default; Notice and
Waiver".
In the event of bankruptcy, insolvency, receivership or similar proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Equipment is owned by the related Owner Trustee in trust, such
Equipment and the related Lease and Equipment Notes might become part of such
proceeding. In such event, payments under such Lease or on such Equipment Notes
may be interrupted and the ability of the related Indenture Trustee to exercise
its remedies under the related Indenture might be restricted, though such
Indenture Trustee would retain its status as a secured creditor in respect of
the related Lease and the related Equipment. Certain of the Aircraft are subject
to Cross-Border Leases. In connection with the realization by the Indenture
Trustee of its security interest in such Aircraft, it may be desirable to have
such Cross-Border Leases terminated. In this regard, the bankruptcy, insolvency,
receivership or like proceeding involving the Cross-Border Lessor or investor
therein might also impede the ability of the Indenture Trustee to exercise its
remedies under the related Indenture. See "-- Cross-Border Leases".
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in aggregate unpaid principal
amount of the Equipment Notes outstanding under any Indenture, the provisions of
such Indenture and the Lease, the Refunding Agreement and the Owner Trust
Agreement corresponding thereto may not be amended or modified, except to the
extent indicated below.
Certain provisions of any Indenture, and of the Lease, the Refunding
Agreement, and the Owner Trust Agreement related thereto, may be amended or
modified by the parties thereto without the consent of the relevant Indenture
Trustee or the holders of the Equipment Notes outstanding under such Indenture,
subject to certain conditions. In the case of each Lease, such provisions
include, among others, provisions relating to maintenance of, and modifications
to, the related Equipment and the return to the related Owner Trustee of the
related Equipment at the end of the term of such Lease. (Indentures, Section
9.01(a))
Without the consent of each holder of an affected Equipment Note then
outstanding, no amendment of or supplement to the related Indenture, Refunding
Agreement or any other related document may (a) modify certain provisions of
such Indenture, certain definitions under such Indenture, or the percentage of
holders of the Equipment Notes required to take or approve any action under such
Indenture, (b) reduce the amount, or change the time of payment or method of
calculation of any amount of principal, Make-Whole Amount, if any, or interest
with respect to any Equipment Note, or alter or modify certain provisions of
such Indenture with respect to the order of priorities in which distributions
thereunder shall be made among the holders of Equipment Notes, the related Owner
Trustee and America West, (c) reduce, modify or amend any indemnities in favor
of the holders of Equipment Notes, (d) consent to any change in such Indenture
or the related Lease which would permit redemption of Equipment Notes earlier
than permitted under such Indenture, (e) release America West from its
obligations in respect of certain payments under the related Lease or (f) permit
the creation of any lien on the related Trust Indenture Estate or deprive any
holder of Equipment Notes of the benefit of the lien of such Indenture on such
Trust Indenture Estate. (Indentures, Section 9.01(b))
INDEMNIFICATION
America West will be required to indemnify each Indenture Trustee, each
Owner Participant, each Owner Trustee, each Pass Through Trustee and the
Subordination Agent, but not any Certificateholder, for certain losses, claims
and other matters (for example, among other things, America West is not
responsible for any losses, claims, and other matters relating to any of such
persons' failure to make a payment to another person, which payment was made by
America West to such first person). Under certain circumstances America West is
required to counter-indemnify each Original Lessee for indemnities owing by such
Original Lessee to each Owner Participant against the loss of depreciation
deductions and certain other benefits allowable for certain income tax purposes
with respect to the related Equipment. Each Owner Trustee
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indemnifies the Indenture Trustee for certain losses, claims and other matters
to the extent not reimbursed by America West; however, recourse is limited to
the related Trust Indenture Estate. Prior to seeking indemnification from the
Trust Indenture Estate for any amount indemnified against by America West under
the related lease, the Indenture Trustee will demand and take necessary action
to pursue indemnification under such Lease. If necessary, the Indenture Trustee
is entitled to indemnification from the related Trust Indenture Estate for any
liability, obligation, loss, damage, penalty, claim or action to the extent not
reimbursed by America West or others. The Indenture Trustee is not indemnified,
however, for, among other things, actions arising from its gross negligence (or
negligence in the handling of funds), willful misconduct or for the inaccuracy
of any representation or warranty made in its individual capacity under the
relevant Refunding Agreement. (Indentures, Section 7.01)
No Trust Company, Owner Participant or any director, officer, employee,
stockholder, agent or affiliate of the Trust Company or Owner Participant (the
"Exculpated Person") will have any obligation, duty or liability of any kind
whatsoever to the Indenture Trustee or holders of any Equipment Notes in
connection with the exercise by any Exculpated Person of any rights of an Owner
Trustee under the related Lease and the other Operative Documents, or the taking
of any action or the failure to take any action, in each case in connection with
any rights of such Owner Trustee under the applicable Indenture and the related
Lease. (Indentures, Section 7.02)
Each Trust Company, Owner Trustee and Owner Participant is required to
indemnify the related Indenture Trustee and the holders of the Equipment Notes
issued with respect to the Equipment in which such Owner Trustee has an interest
for certain losses that may be suffered as a result of its failure to discharge
certain liens or claims on or against the assets subject to the lien of the
related Indenture (Refunding Agreements, Section 13). The Indenture Trustee is
not under any obligation to take any action, risk liability or expend its own
funds under the relevant Indenture if it has reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk is not
reasonably assured to it. (Indentures, Section 5.03)
THE LEASES
Each Aircraft and each Spare Engine is leased by an Owner Trustee to
America West under the relevant Lease.
TERMS AND RENTALS
Each Aircraft and Spare Engine is leased separately under its respective
Lease for a term commencing on the date of the delivery of such Equipment to the
applicable Original Lessee and expiring between 2010 and 2013, which in all
cases is not earlier than the latest maturity date of the Equipment Notes issued
pursuant to the related Indenture, unless earlier terminated as provided by the
related Lease. Basic Rent payments for each Aircraft and Spare Engine are
payable semi-annually on each Basic Rent payment date. (Leases, Section 4 and
Exhibit C) America West's obligations to pay rent and to make, or cause to be
made, other payments under each Lease are unsubordinated unsecured obligations
of America West and will rank pari passu in right of payment with all other
unsubordinated unsecured indebtedness of America West. The rental obligations
will be effectively subordinated to any secured indebtedness of America West to
the extent of the value of the assets securing such indebtedness and would be
effectively subordinated to all obligations of America West's subsidiaries (if
any). America West has no right to purchase any Equipment at the conclusion of
the Term of such Lease.
NET LEASE; MINIMUM PAYMENTS
America West's obligations in respect of each Lease of an Aircraft and
Spare Engine are those of a lessee under a "net lease". Lessee's obligations to
pay all rent and perform all other obligations under the Leases are, by the
terms of the Leases, stated to be absolute and unconditional. The Leases provide
that (i) the Stipulated Loss Value for each item of Equipment, together with the
payment of all rent then due thereunder, as of any time shall be sufficient to
pay in full the unpaid principal amount of the related Equipment Notes and all
accrued and unpaid interest and (ii) Basic Rent payable on any Basic Rent
payment date shall at least equal the amount of principal and interest due and
payable on the related Equipment Notes on such Basic Rent payment date. (Leases,
Section 4(b))
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REGISTRATION; MAINTENANCE; MODIFICATIONS
America West is obligated to cause the Aircraft to be duly registered with
the FAA in the name of the Owner Trustee (or with the aviation authority in
certain other jurisdictions in connection with the re-registration of the
Aircraft in such jurisdictions). Registration of the Aircraft in specified
jurisdictions outside the United States is subject to, among other conditions
specified in the related Refunding Agreement, the lien of the related Indenture
continuing as a valid and duly perfected security interest in the related
Aircraft and the related Lease. America West is also obligated to the extent set
forth in the related Lease, to maintain, service, repair and overhaul the
Equipment (or cause the Equipment to be maintained, serviced, repaired and
overhauled) in accordance with good industry practice and so as to keep the
Equipment in as good a condition as when delivered to America West under such
Lease, ordinary wear and tear excepted, and in such condition as is necessary to
enable the airworthiness certification of such Equipment to be maintained in
good standing at all times (a) under the Federal Aviation Act and any other
applicable law, or (b) under the applicable laws of any other jurisdiction in
which the Aircraft may be registered, except when any grounding of the Aircraft
is fleetwide in nature so long as America West or a Permitted Sublessee is
contesting in good faith such grounding. America West is also required to cause
the Aircraft then subject to such Leases to be maintained 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. America West will maintain, service,
repair and overhaul the Equipment in the same manner and with the same care as
used by America West with respect to similar aircraft and engines owned by
America West and, during any period in which a sublease permitted by the related
Lease is in effect, will cause to be performed all maintenance, service, repair
and overhaul of the Equipment in the same manner and with the same care as used
by the Permitted Sublessee with respect to similar aircraft and engines owned by
such Permitted Sublessee. (Leases, Section 6(d) and 6(e))
America West will not permit the Aircraft to be maintained, used, serviced,
repaired or operated in violation of any law of any government having
jurisdiction, or in violation of any airworthiness certificate, license or
registration to the extent mandatory for operators similar to America West or
the Permitted Sublessee, except to the extent America West (or any Permitted
Sublessee) is in good faith contesting the validity of any such requirements by
appropriate proceedings which, among other things specified in each Lease, do
not impair the interest of the Owner Trustee in the Aircraft or the validity or
the priority of the Lien of the Indenture. (Leases, Section 6(c)) America West
must make (or cause to be made) all alterations, modifications and additions to
each Airframe, Engine and Spare Engine necessary to meet the applicable
standards of the FAA or any other applicable governmental authority having
jurisdiction. America West (or a Permitted Sublessee) may make other
alterations, modifications and additions to any Airframe, any Engine or any
Spare Engine as America West (or a Permitted Sublessee) may deem desirable in
the proper conduct of its business, so long as such alterations, modifications
or additions do not, among other things specified in the related Lease, diminish
the value, utility or remaining useful life, or impair the condition or
airworthiness of such Airframe, Engine or Spare Engine, below the value, utility
or remaining useful life or condition or airworthiness thereof immediately prior
to such alteration, modification or addition (assuming such Airframe, Engine or
Spare Engine was in the condition required by the terms of the related Lease).
Title to parts incorporated or installed in or added to such Airframe, Engine or
Spare Engine as a result of such alterations, modifications or additions vests
in the Owner Trustee subject to certain exceptions (including, in the case of
any Aircraft subject to a Cross-Border Lease, that title to the relevant parts
shall remain with the relevant Cross-Border Lessor). In certain circumstances,
America West (or a Permitted Sublessee) is permitted to remove from an Airframe,
Engine or Spare Engine parts which were added by America West (or a Permitted
Sublessee) so long as certain conditions are met and any such removal does not,
among other things specified in the related Lease, diminish or impair the value,
utility, remaining useful life, condition or airworthiness, which such Airframe,
Engine or Spare Engine would have had at such time had such addition, alteration
or modification not occurred. (Leases, Section 9)
Subject to certain exceptions, including as set forth above, America West
is obligated to replace or cause to be replaced all parts incorporated or
installed in or attached to any Airframe, any Engine or any Spare Engine that
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or
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permanently rendered unfit for use. Replacement parts become subject to the
related Lease and the lien of the related Indenture in lieu of the part
replaced. (Leases, Section 9(a))
SUBLEASING AND POSSESSION
America West is permitted, subject to certain limitations, to sublease any
Equipment to any Certificated Air Carrier or to certain foreign entities so long
as the term of any such sublease does not extend beyond the term of the related
Lease. In addition, subject to certain limitations, America West is permitted to
transfer possession of any Airframe, any Engine or any Spare Engine other than
by sublease, including transfers of possession by America West in connection
with certain interchange and pooling arrangements, transfers to the United
States government and any instrumentality or agency thereof, "wet leases" and
transfers in connection with maintenance or modifications.
Except for certain Aircraft described in "Description of the Equipment
Notes -- Cross-Border Leases", there are no general geographical restrictions on
America West's (or any Permitted Sublessee's) ability to operate the Equipment.
The extent to which the relevant Indenture Trustee's lien would be recognized in
any Equipment if such Equipment were located in certain countries is uncertain.
See "Description of the Equipment Notes -- Security". While the Indenture
Trustees' rights and remedies in the event of a default under each Lease include
the right to terminate such Lease and repossess the Equipment subject thereto,
it may be difficult, expensive and time-consuming to obtain possession of
Equipment, particularly when the Equipment has been registered in a foreign
jurisdiction or is located outside the United States or is subleased to a
foreign operator. Any such exercise of the right to repossess the Equipment will
be subject to the limitations and requirements of applicable law, which could
include the need to obtain approvals for deregistration or re-export of the
Aircraft, which may be subject to delays and to political risk. When a
defaulting Permitted Sublessee or other permitted transferee is the subject of a
bankruptcy, insolvency or similar event, such as protective administration,
additional limitations on the exercise of remedies may apply. Furthermore,
certain jurisdictions may accord higher priority to certain other liens or other
third-party rights over the Equipment.
In addition, at the time of obtaining repossession of the Equipment under
the related Lease or foreclosing on the lien on the Equipment under the related
Indenture, an Airframe subject to such Lease may not be equipped with Engines
owned by the applicable Owner Trustee and, in such case, America West is
required to deliver engines attached to such Airframe of the same model and
equivalent modification status as the Engines or, at America West's option, an
engine of an improved model suitable for installation and use on the Airframe
without diminishing the value, utility and remaining useful life of such
Airframe, in each case having a value, utility and remaining useful life at
least equal to, and being in an operating condition as good as, the Engines
subject to such Lease. (Leases, Section 16(c)) Notwithstanding America West's
agreement in the related Lease, in the event America West fails to transfer
title to engines not owned by the applicable Owner Trustee that are attached to
an Airframe on repossession or return thereof, at the time of obtaining
repossession of the Aircraft it could be difficult, expensive and time-consuming
to assemble an Aircraft consisting of an Airframe and related Engines subject to
such Lease. See "Risk Factors -- Factors Relating to the Certificates and the
Offering -- Repossession".
LIENS
America West is required to maintain each Aircraft, Airframe, Engine and
Spare Engine free of any liens, other than specified permitted liens including
the respective rights of America West, the relevant Owner Trustee, Owner
Participant and Indenture Trustee and any other rights as provided in the
related Lease and any rights of others to possession of the Equipment in
accordance with the terms of the related Lease (including Permitted Sublessees);
liens, the removal of which is the responsibility of other parties; liens for
taxes either not yet due or being diligently contested in good faith by
appropriate proceedings so long as such proceedings or such liens do not, among
other things as may be specified in the related Lease, involve any material
danger of the sale, forfeiture or loss of such Aircraft, Airframe, Engine or
Spare Engine or any interest of the related Owner Trustee or Indenture Trustee
therein; inchoate materialmen's, mechanics' and other similar inchoate liens
arising in the ordinary course of America West's business for sums not overdue
for a period of more than 45 days or being diligently contested in good faith so
long as such proceedings or such
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liens do not involve any material danger of the sale, forfeiture or loss of such
Aircraft, Airframe, Engines or Spare Engines or any interest of the related
Owner Trustee or Indenture Trustee therein; judgment liens discharged, vacated
or reversed within a period of 30 days as specified in, and subject to other
limitations which may be contained in, the related Lease, and any other lien
with respect to which America West (or a Permitted Sublessee) has provided a
bond adequate in the reasonable opinion of the Owner Participant and the
Indenture Trustee. (Leases, Section 14)
INSURANCE
Subject to certain exceptions, America West is obligated, at its expense,
to maintain or cause to be maintained on each Aircraft, with reputable and
creditworthy insurers of recognized responsibility and standing experienced in
aircraft insurance, comprehensive aircraft and general public liability
insurance (exclusive of manufacturer's product liability insurance) and property
damage insurance in an amount not less than $350 million, combined single limit,
per occurrence or such higher amount, and of such types and terms as are
customarily carried by prudent certificated air carriers, similarly situated to
America West, operating aircraft of similar size and engines. America West is
also obligated, at its expense, to maintain or cause to be maintained,
"all-risk" ground and flight aircraft hull insurance and "all-risk" coverage
including transit insurance with respect to Engines while not installed on an
Airframe, of such type, on such terms and in such amounts as customarily
maintained by prudent certificated air carriers, similarly situated to America
West, operating aircraft of similar size and engines; provided, however, that,
subject to permitted deductibles, such all-risk insurance shall be for an amount
on an "agreed value" basis not less than the Stipulated Loss Value (as set forth
in the related Lease) determined from time to time for such Equipment. (Leases,
Sections 12(a) and 12(b))
Subject to certain exceptions, the proceeds of policies covering loss of or
damage to an Aircraft shall be payable, up to the Stipulated Loss Value for such
Aircraft, to the related Indenture Trustee for any loss involving proceeds in
excess of $500,000 and the entire amount of any loss involving proceeds of
$500,000 or less shall be paid to America West (or a Permitted Sublessee) so
long as no Lease Event of Default or Lease Default exists. America West (and any
Permitted Sublessee) may self-insure for such loss or damage to the extent of up
to a $1 million deductible per Aircraft and Spare Engine. (Leases, Sections
12(b) and 12(d))
In respect of each Aircraft and Spare Engine, America West is required to
cause the related Owner Trustee, Owner Participant and Indenture Trustee and
certain other persons, but not the Certificateholders, to be included as
additional insureds as their respective interests may appear under all insurance
policies required by the terms of the Lease with respect to such Equipment.
(Leases, Sections 12(a) and 12(b))
America West may not operate (or permit any Permitted Sublessee to operate)
any Equipment in any area that is excluded from coverage by any insurance policy
in effect with respect to such Equipment and required by the related Lease
unless the Equipment is covered by a United States government indemnity.
(Leases, Section 6(c))
America West's obligation to provide any insurance required by any Lease
shall be satisfied if indemnification from the United States government is
provided to the extent and subject to the terms and conditions of such Lease.
(Leases, Section 12(k))
RENEWAL OPTION
Prior to the end of the Basic Term and subject to certain conditions,
America West will have an option to renew each Lease for one Renewal Term
consisting of a period equal to five years. The Renewal Rent for the Renewal
Term shall be the "fair market rental value" of the Equipment for such Renewal
Term as determined in accordance with the related Lease. (Leases, Section 20(a))
EVENTS OF LOSS
If an Event of Loss occurs with respect to any Airframe or any Airframe and
any Engines then installed thereon or any Spare Engine, America West is
obligated either (i) to replace such Airframe, Airframe and
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Engines or Spare Engine or (ii) to pay to the related Owner Trustee the
applicable Stipulated Loss Value, as adjusted, together with certain additional
amounts. If America West elects to replace such Airframe, Airframe and Engines
or Spare Engine, it must do so not later than the 120th day after the related
Event of Loss, with an airframe or airframe and engine(s) or engine, as
applicable, meeting required specifications and free and clear of all liens
(other than certain permitted liens) and having a value, utility and remaining
useful life at least equal to, and being in at least as good operating condition
as, such item of Equipment prior to the Event of Loss, assuming maintenance
thereof in accordance with the related Lease. If America West elects to pay the
Stipulated Loss Value for such Airframe, Airframe and Engines or Spare Engine,
America West must make such payment not later than 120 days after the related
Event of Loss. Upon making such payment, together with all other amounts then
due under the related Lease with respect to such Airframe, Airframe and Engines
or Spare Engine, the Lease for such Aircraft or Spare Engine shall terminate and
the obligation of America West to make the scheduled Basic Rent payments with
respect thereto shall cease. (Leases, Section 11(a))
If an Event of Loss occurs with respect to an Engine, America West is
required to replace such Engine within 60 days from the date of such Event of
Loss with another engine, free and clear of all liens (other than certain
permitted liens), meeting required specifications and having a value, utility
and remaining useful life at least equal to, and being in at least as good
operating condition as, the Engine being replaced (assuming that such Engine had
been maintained in accordance with the related Lease) suitable for installation
and use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe. (Leases, Section 11(b))
An "Event of Loss" with respect to an Aircraft, Airframe, any Engine or any
Spare Engine means any of the following events with respect thereto:
(a) loss, or, in the case of certain Aircraft, the actual or constructive
total loss, of such Equipment or the use thereof due to theft or
disappearance for the period set forth in the relevant Lease;
(b) destruction or damage of such Equipment that renders repair uneconomic
or such property permanently unfit for normal use by America West (or
a Permitted Sublessee) for any reason whatsoever;
(c) any loss or disappearance of or damage to or destruction of such
Equipment 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 Equipment by any governmental entity which
results in the loss of title by Owner Trustee for ten 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 such Equipment 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 America West for
the period set forth in the relevant Lease (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 Equipment on
the basis of a total loss);
(f) the requisition for use of such Equipment 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 of the relevant Lease;
(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 Equipment in the normal course of
America West's (or a Permitted Sublessee's) business of air
transportation of passengers shall have been prohibited for a period
of six consecutive months, unless America West (or a Permitted
Sublessee), prior to the expiration of such six-month period, has
undertaken and is
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diligently carrying forward all steps which are necessary or
desirable to permit normal use of such Equipment by America West (or
a Permitted Sublessee), or, in any event, if such normal use shall
have been so prohibited by any such governmental entity for the
period set forth in the relevant Lease; or
(h) as otherwise provided in the relevant Lease.
An Event of Loss with respect to an Aircraft is 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 relevant Airframe, be deemed an Event of Loss with
respect to such Airframe. (Leases, Section 1)
INDEMNIFICATION
Subject to certain exceptions, America West has agreed to indemnify, among
others, each Owner Participant, each Owner Trustee, each of the Trustees and
each of the Indenture Trustees, but not the holders of the Certificates, for
certain liabilities, losses, fees and expenses and for certain other matters
arising out of the transactions described herein or relating to the Equipment.
In addition, under certain circumstances America West is required to indemnify
such persons, but not the holders of the Certificates, against certain taxes,
levies, duties, withholdings and for certain other matters (but excluding, among
other things, certain income and capital gains taxes) relating to such
transactions or the Equipment. (Leases, Sections 10 and 13)
LEASE EVENTS OF DEFAULT
The Lease Events of Default include, among other things, (i) failure by
America West to make any payment of Basic Rent, Renewal Rent or Stipulated Loss
Value within three business days after such payment is due, or any other payment
of Supplemental Rent within ten business days after the same shall have become
due and America West has received written demand therefor by the party entitled
thereto (provided that failure to pay amounts owed under certain related
documents shall not constitute an Event of Default unless the Owner Trustee or
the Owner Participant delivers notice to America West and the relevant Indenture
Trustee (as applicable) that such failure shall constitute an Event of Default);
(ii) failure by America West to perform or observe any covenant, condition or
agreement to be performed or observed by it under the related Lease or certain
related documents, and such failure shall have continued unremedied after notice
and specified cure periods; (iii) any representation or warranty made by America
West under the related Refunding Agreement and certain related documents or in
any certificate furnished by America West in connection therewith, shall have
proved to have been incorrect in any material respect when made and continued
unremedied after notice and specified cure periods; (iv) the occurrence of
certain events of bankruptcy, reorganization or insolvency of America West; (v)
America West's loss or suspension of its United States air carrier license or
certificate under Part 121 of the Federal Aviation Regulations or its
certificate of public convenience and necessity under Section 41102(a) of the
Federal Aviation Act or, subject to certain exceptions, its cessation of
business as, or cessation of a preponderance of its business to be, that of a
commercial passenger Certificated Air Carrier and (vi) subject to certain
exceptions, the failure of America West to obtain and maintain (or cause to be
obtained and maintained) insurance on or in respect of any Equipment in
accordance with the provisions of the relevant Lease, or the operation of any
Equipment outside of the scope or in violation of the terms of such insurance.
(Leases, Section 17) The Leases require America West to provide to the relevant
Owner Trustee as beneficiary thereof irrevocable standby letters of credit for
drawdown upon the occurrence of certain Lease Defaults or Lease Events of
Default. These letters of credit will not be assigned to the related Indenture
Trustee under its Indenture.
There are no cross-default provisions in the Leases. Consequently, events
resulting in a Lease Event of Default under any particular Lease may or may not
result in a Lease Event of Default occurring under any other Lease. (Leases,
Section 17)
If a Lease Event of Default has occurred and is continuing and the related
Lease has been declared to be in default, the Owner Trustee may, subject to
certain limitations imposed by law, exercise one or more of the remedies
provided in such Lease with respect to the related Equipment. Such remedies
include the right to
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<PAGE> 108
repossess such Equipment, to sell or re-lease such Equipment free and clear of
America West's rights and retain the proceeds and to require America West to pay
liquidated damages as computed in accordance with such Lease. (Leases, Section
18)
SECTION 1110
In each Lease, America West covenants and agrees that it will support any
motion, petition or application filed by the related Owner Trustee, as lessor
under the related Lease, with any bankruptcy court having jurisdiction over
America West, whereby such Owner Trustee seeks recovery of possession of the
Equipment under Section 1110 of the Bankruptcy Code. (Lease, Section 8(i)) See
"Description of the Equipment Notes -- Remedies".
CERTAIN DEFINED TERMS UNDER THE LEASES
"Airframe" means, with respect to each Aircraft, such Aircraft (except
Engines or engines from time to time installed thereon) 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) in accordance with the provisions
of the related Lease.
"Basic Rent" means, for any Equipment, the scheduled basic rent in respect
of such Equipment payable semi-annually for the Term of the related Lease.
"Basic Term" means, for any Equipment, a term commencing on the date of
delivery of such Equipment to the applicable Original Lessee under the related
Lease and expiring not earlier than the latest maturity date of the Equipment
Notes issued pursuant to the related Indenture, unless earlier terminated as
provided by the related Lease.
"Certificated Air Carrier" means 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.
"Engine" means with respect to each Aircraft, (i) each of the two IAE Model
V2500 engines initially installed on the Airframe 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 for any Engine in accordance with the provisions of the
related Lease.
"Lease Default" means an event or condition which would constitute a Lease
Event of Default with the lapse of time or the giving of notice or both.
"Lease Payment Dates" means, with respect to each Lease, January 2 and July
2 of each year, commencing on January 2, 1997.
"Permitted Sublessee" means any sublessee permitted under a Lease from time
to time.
"Renewal Rent" means the rent payable during the Renewal Term for any
Equipment pursuant to the related Lease.
"Renewal Term" means the period following the end of the Basic Term if
America West has exercised its renewal option for such Equipment pursuant to the
related Lease.
"Supplemental Rent" means all amounts, liabilities and obligations (other
than Basic Rent or Renewal Rent) which America West assumes or agrees to pay
under each Lease or the other agreements related thereto.
"Term" means, with respect to a Lease, collectively, the Basic Term and, if
America West has exercised its renewal option for such Equipment pursuant to
such Lease, the Renewal Term.
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<PAGE> 109
CROSS-BORDER LEASES
"Cross-Border Lease" means each of the lease agreements between a
Cross-Border Lessor and the applicable Cross-Border Lessee.
"Cross-Border Lessee" means each of the lessees of an Aircraft under a
Cross-Border Lease.
"Cross-Border Lessor" means each of the foreign lessors of an Aircraft.
Two Aircraft securing the obligations under the two related Indentures are
subject to Japanese Cross-Border Lease financings with terms expiring in 1999.
The rights of the Cross-Border Lessee under each of these financings have been
assigned to the relevant Owner Trustees.
Under the terms of each of the Cross-Border Lease financings, title to the
relevant Aircraft is held by a special purpose Japanese entity. In summary, the
Japanese lease financing documentation provides that, subject to various terms
and conditions, the relevant Cross-Border Lessee is entitled to acquire title to
the relevant Aircraft on termination thereof, upon not less than 90 days' notice
and upon payment of an agreed sum upon voluntary termination, and otherwise
whether or not an agreed sum is paid. To the extent, if any, that passage of
title is conditioned upon payment of an agreed sum, the obligation to pay such
sum has been assumed (against receipt of cash) by a foreign financial
institution or, to the extent not so assumed, cash collateralized by or on
behalf of the relevant Cross-Border Lessee. In addition, each Cross-Border
Lessor has expressly agreed that its interest in the Aircraft is subject and
subordinate to the security interest of the relevant Indenture Trustee.
The ability of an Indenture Trustee to realize upon its security interest
in an Aircraft that is subject to a Cross-Border Lease financing could be
adversely affected if the relevant Cross-Border Lessor or any investor in such
lessor were to become a debtor in a bankruptcy or similar proceeding in its home
jurisdiction and a creditor, trustee in bankruptcy, liquidator, receiver or
similar official were to take the position that the related Aircraft should be
treated as part of the estate of such lessor or investor, as the case may be
(particularly, if at the same time the Indenture Trustee is seeking to exercise
remedies under the related Indenture). If such a position were to be taken in
such a proceeding, a delay in the transfer or re-acquisition of title to such
Aircraft to or by the relevant Owner Trustee following the occurrence and
continuance of a Lease Event of Default under the related Lease could occur.
Such a delay might impede the ability of an Indenture Trustee to realize upon
the Aircraft collateral securing the related Equipment Notes.
Legal opinions from Japanese counsel (based on certain assumptions and
qualifications) will be given to the effect that the interests of the relevant
Cross-Border Lessor have been validly subordinated to the lien of the relevant
Indenture Trustee, and that any liquidator, receiver, trustee or any other
similar officer of the Cross-Border Lessor should not be entitled to deny or
contest such subordination in a bankruptcy or similar proceeding in Japan. There
can be no assurance, however, that the circumstances or the law upon which such
counsel based their opinions will not change, that a court of competent
jurisdiction in Japan would not find differently, that such opinions would prove
to be correct or that the law of another jurisdiction would not apply.
In connection with the realization by the Indenture Trustee of its security
interest in the Aircraft, it may be desirable to have such Cross-Border Leases
terminated.
The information set forth above concerning Cross-Border Lease financings
was provided by GPA and America West takes no responsibility for the accuracy
thereof.
THE REFUNDING AGREEMENT
TRANSFER OF OWNER PARTICIPANT INTERESTS
Subject to certain restrictions, each Owner Participant may transfer its
beneficial interest in the relevant Owner Trust. (Refunding Agreements, Section
10)
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<PAGE> 110
REGISTRATION OF AIRCRAFT
The Aircraft (including the Aircraft subject to the Cross-Border Leases)
have been registered under the Federal Aviation Act in the name of the relevant
Owner Trustee. America West may, under certain circumstances, request the
re-registration of such Aircraft in certain jurisdictions outside of the United
States, subject to, among other conditions specified in the related Refunding
Agreement, the lien of the related Indenture continuing as a perfected security
interest in such Aircraft and the related Lease. (Refunding Agreements, Section
11)
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<PAGE> 111
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion describes the principal U.S. federal income tax
consequences to Certificateholders of the purchase, ownership and disposition of
the Certificates. In the opinion of Andrews & Kurth L.L.P., special tax counsel
to America West ("Special Tax Counsel") such discussion is accurate in all
material respects of the matters discussed herein. Except as otherwise
specified, the discussion is addressed to beneficial owners of Certificates
("U.S. Certificateholders") that are citizens or residents of the United States,
corporations, partnerships or other entities created or organized in or under
the laws of the United States or any State, or estates or trusts the income of
which is subject to U.S. federal income taxation regardless of its source ("U.S.
Persons") that will hold the Certificates as capital assets. This discussion
does not address the tax treatment of U.S. Certificateholders that may be
subject to special tax rules, such as banks, insurance companies, dealers in
securities or commodities, tax-exempt entities, holders that will hold
Certificates as part of a straddle or holders that have a "functional currency"
other than the U.S. Dollar, nor does it address the tax treatment of U.S.
Certificateholders that do not acquire Certificates at the initial offering
price as part of the initial offering. This discussion does not describe any tax
consequences arising under the laws of any State, locality or taxing
jurisdiction other than the United States.
This discussion is based upon the tax laws of the United States as in
effect on the date of this Prospectus, as well as judicial and administrative
interpretations thereof (in final or proposed form) available on or before such
date. All of the foregoing are subject to change or differing interpretations,
which could apply retroactively. Prospective investors should note that no
rulings have been or will be sought from the Internal Revenue Service (the
"IRS ") with respect to any of the federal income tax consequences discussed
below, and no assurance can be given the IRS will not take contrary positions.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE CERTIFICATES.
TAX STATUS OF THE TRUSTS
In the opinion of Special Tax Counsel, each Trust will be classified as a
grantor trust under subpart E, Part I of Subchapter J of Chapter 1 of Subtitle A
of the Code and not as an association taxable as a corporation for U.S. federal
income tax purposes. Accordingly, each U.S. Certificateholder will be subject to
federal income taxation as if it owned directly a pro rata undivided interest in
each asset owned by the corresponding Trust and paid directly, its share of fees
and expenses paid by such Trust.
TAXATION OF CERTIFICATEHOLDERS GENERALLY
A U.S. Certificateholder will be treated as owning its pro rata undivided
interest in each of the Equipment Notes and any other property held by the
related Trust. Accordingly, each U.S. Certificateholder's share of interest paid
on the Equipment Notes will be taxable as ordinary income, as it is paid or
accrued, in accordance with such owner's method of accounting for U.S. federal
income tax purposes. Any amounts received by a Trust from Interest Drawings
under the relevant Liquidity Facility will be treated for U.S. federal income
tax purposes as having the same characteristics as the payments they replace.
Each U.S. Certificateholder will be entitled to deduct, consistent with its
method of accounting, its pro rata share of fees and expenses paid or incurred
by the corresponding Trust as provided in Section 162 or 212 of the Code.
Certain fees and expenses, including fees paid to the Trustee and the Liquidity
Provider, will be borne by parties other than the Certificateholders. It is
possible that such fees and expenses will be treated as constructively received
by the Trust, in which event a U.S. Certificateholder will be required to
include in income and will be entitled to deduct its pro rata share of such fees
and expenses. If a U.S. Certificateholder is an individual, estate or trust, the
deduction for such holder's share of such fees or expenses will be allowed only
to the extent that all of such holder's miscellaneous itemized deductions,
including such holder's share of such fees and expenses, exceed 2% of such
holder's adjusted gross income. In addition, in the case of U.S.
Certificateholders who are individuals, certain otherwise allowable itemized
deductions will be subject generally to additional limitations on itemized
deductions under the applicable provisions of the Code.
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<PAGE> 112
EFFECT OF SUBORDINATION OF SUBORDINATED CERTIFICATEHOLDERS
If any of the Class B Trust, the Class C Trust, the Class D Trust or the
Class E Trust (such Trusts being the "Subordinated Trusts" and the related
Certificates being the "Subordinated Certificates") receives less than the full
amount of the receipts of principal or interest paid with respect to the
Equipment Notes held by it (any shortfall in such receipts being the "Shortfall
Amounts") because of the subordination of the Equipment Notes held by such Trust
under the Intercreditor Agreement, the corresponding owners of beneficial
interests in the Subordinated Certificates (the "Subordinated
Certificateholders") would probably be treated for federal income tax purposes
as if they had (1) received as distributions their full share of such receipts,
(2) paid over to the relevant preferred class of Certificateholders an amount
equal to their share of such Shortfall Amount, and (3) retained the right to
reimbursement of such amounts to the extent of future amounts payable to such
Subordinated Certificateholders with respect to such Shortfall Amount.
Under this analysis, (1) Subordinated Certificateholders incurring a
Shortfall Amount would be required to include as current income any interest or
other income of the corresponding Subordinated Trust that was a component of the
Shortfall Amount, even though such amount was in fact paid to another class of
Certificateholders, (2) a loss would only be allowed to such Subordinated
Certificateholders when their right to receive reimbursement of such Shortfall
Amount became worthless (i.e., when it becomes clear that funds will not be
available from any source to reimburse such loss), and (3) reimbursement of such
Shortfall Amount prior to such a claim of worthlessness would not be taxable
income to Subordinated Certificateholders because such amount was previously
included in income. These results should not significantly affect the inclusion
of income for Subordinated Certificateholders on the accrual method of
accounting, but could accelerate inclusion of income to Subordinated
Certificateholders on the cash method of accounting by, in effect, placing them
on the accrual method.
SALE OR OTHER DISPOSITION OF THE CERTIFICATES
Upon the sale, exchange or other disposition of a Certificate, a U.S.
Certificateholder generally will recognize capital gain or loss equal to the
difference between the amount realized on the disposition (other than any amount
attributable to accrued interest which will be taxable as ordinary income) and
the U.S. Certificateholder's adjusted tax basis in the related Equipment Notes
and any other assets held by the corresponding Trust. A U.S. Certificateholder's
adjusted tax basis will equal the holder's cost for its Certificate, plus any
accrued OID or market discount previously included in income or less any
amortized bond premium or any previously recognized losses or prior principal
payments. Any gain or loss generally will be capital gain or loss (other than
accrued market discount not previously included in income) if the Certificate
was held as a capital asset.
FOREIGN CERTIFICATEHOLDERS
Subject to the discussion of backup withholding below, payments of
principal and interest on the Equipment Notes to, or on behalf of, any
beneficial owner of a Certificate that is not a U.S. Person (a "Non-U.S.
Certificateholder") will not be subject to U.S. federal withholding tax;
provided, in the case of interest, that (i) such Non-U.S. Certificateholder does
not actually or constructively own 10% or more of the total combined voting
power of all classes of the stock of any Owner Participant or any transferee of
such interest, (ii) such Non-U.S. Certificateholder is not a controlled foreign
corporation for U.S. tax purposes that is related to an Owner Participant or any
transferee of such interest and (iii) either (A) the Non-U.S. Certificateholder
certifies, under penalties of perjury, that it is not a U.S. Person and provides
its name and address or (B) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "financial institution") and holds the Certificate
certifies, under penalties of perjury, that such statement has been received
from the Non-U.S. Certificateholder by it or by another financial institution
and furnishes the payor with a copy thereof. America West has no obligation to
indemnify any Certificateholder with respect to withholding taxes.
Any capital gain realized upon the sale, exchange, retirement or other
disposition of a Certificate by a Non-U.S. Certificateholder will not be subject
to U.S. federal income or withholding taxes if (i) such gain is
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<PAGE> 113
not effectively connected with a U.S. trade or business of the holder and (ii)
in the case of an individual, such holder is not present in the United States
for 183 days or more in the taxable year of the sale, exchange, retirement or
other disposition or receipt.
BACKUP WITHHOLDING
Payments made on the Certificates and proceeds from the sale of
Certificates will not be subject to a backup withholding tax of 31% unless, in
general, the Certificateholder fails to comply with certain reporting procedures
or otherwise fails to establish an exemption from such tax under applicable
provisions of the Code.
STATE TAX CONSIDERATIONS
The Trustee is a national banking association with its principal corporate
trust office in Hartford, Connecticut. Shipman & Goodwin LLP, special counsel
for the Trustee, has advised the Company that, in its opinion, prior to a
default and under currently applicable law, assuming that each Trust will not be
classified as an association taxable as a corporation for federal income tax
purposes, but rather will be classified as a grantor trust under Section 671 of
the Code, (i) the Trust will not be subject to any tax, fee or other
governmental charge under the laws of the State of Connecticut or any political
subdivision thereof and (ii) Certificateholders that are not residents of or
otherwise subject to tax in the State of Connecticut will not be subject to any
tax, fee or other governmental charge under the laws of the State of Connecticut
or any political subdivision thereof as a result of purchasing, owning or
selling a Certificate.
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<PAGE> 114
ERISA CONSIDERATIONS
IN GENERAL
Title I of ERISA imposes certain requirements on employee benefit plans
subject to ERISA ("ERISA Plans"), and on those persons who are fiduciaries with
respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA's
general fiduciary requirements, including the requirement of investment prudence
and diversification and the requirement that an ERISA Plan's investment be made
in accordance with the documents governing the ERISA Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of Plans and certain persons (referred to as
"parties in interest" or "disqualified persons") having certain relationships to
such Plans, unless a statutory or administrative exemption is applicable to the
transaction. A party in interest or disqualified person who engages in a
prohibited transaction may be subject to excise taxes and other penalties and
liabilities under ERISA and the Code.
The U.S. Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests in a Certificate, the Plan's assets would include both the Certificate
and an undivided interest in each of the underlying assets of the corresponding
Trust, including the Equipment Notes held by such Trust, unless it is
established that equity participation in the Trust by "benefit plan investors"
(including Plans and entities whose underlying assets include plan assets by
reason of an employee benefit plan's investment in the entity) is not
"significant" within the meaning of the Plan Asset Regulation. In that regard,
the extent to which there is equity participation in a particular Trust on the
part of benefit plan investors will not be monitored. If the assets of a Trust
were deemed to constitute the assets of a Plan, transactions involving the
assets of such Trust could be subject to the prohibited transaction provisions
of ERISA and Section 4975 of the Code unless a statutory or administrative
exemption were applicable to the transaction.
The fiduciary of a Plan that proposes to purchase and hold any Certificates
should consider whether such purchase and holding may involve the indirect
extension of credit to a party in interest or a disqualified person. In
addition, whether or not the assets of a Trust are deemed to be Plan Assets
under the Plan Asset Regulation, if Certificates are purchased by a Plan and
Certificates of a subordinate Class are held by a party in interest or a
disqualified person with respect to such Plan, the exercise by the holder of the
subordinate Class of Certificates of its right to purchase the senior Classes of
Certificates upon the occurrence and during the continuation of a Triggering
Event could be considered to constitute a prohibited transaction unless a
statutory or administrative exemption were applicable. Depending on the identity
of the Plan fiduciary making the decision to acquire or hold Certificates on
behalf of a Plan, PTCE 91-38 (relating to investments by bank collective
investment funds), PTCE 84-14 (relating to transactions effected by a "qualified
professional asset manager"), PTCE 95-60 (relating to investment by an insurance
company general account), PTCE 90-1 (relating to investments by insurance
company pooled separate accounts) or PTCE 96-23 (relating to transactions
effected by an "in-house asset manager") (collectively, the "Class Exemptions")
could provide an exemption from the prohibited transaction provisions of ERISA
and Section 4975 of the Code. There can be no assurance that any of these Class
Exemptions or any other exemption will be available with respect to any
particular transaction involving the Certificates.
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of Section 4975
of the Code, may nevertheless be subject to state or other federal laws that are
substantially similar to the foregoing provisions of ERISA and the Code.
Fiduciaries of any such plans should consult with their counsel before
purchasing any Certificates.
Any Plan fiduciary which proposes to cause a Plan to purchase any
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
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CLASS A CERTIFICATES
In addition to the Class Exemptions, an individual exemption may apply to
the purchase, holding and secondary market sale of Class A Certificates by
Plans, provided that certain specified conditions are met. In particular, the
U.S. Department of Labor has issued individual administrative exemptions to
certain of the Underwriters which are substantially the same as the
administrative exemption issued to Morgan Stanley & Co. Incorporated, Prohibited
Transaction Exemption 90-24 (55 Fed. Reg. 20,548 (1990)) (the "Underwriters
Exemption"), which generally exempts from the application of certain, but not
all, of the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code certain transactions relating to the initial purchase,
holding and subsequent secondary market sale of pass-through certificates which
represent an interest in a trust, the assets of which include equipment notes
secured by leases, provided that certain conditions set forth in the
Underwriters Exemption are satisfied.
The Underwriters Exemption sets forth a number of general and specific
conditions which must be satisfied for a transaction involving the initial
purchase, holding or secondary market sale of Class A Certificates to be
eligible for exemptive relief thereunder. In particular, the acquisition of
Class A Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's length transaction with an unrelated
party; the rights and interests evidenced by the Certificates must not be
subordinated to the rights and interests evidenced by other Certificates of the
same trust estate; the certificates at the time of acquisition by the Plan must
be rated in one of the three highest generic rating categories by Moody's,
Standard & Poor's, Duff & Phelps Inc. or Fitch Investors Services, L.P.; and the
investing Plan must be an accredited investor as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
The Underwriters Exemption does not apply to the Class B Certificates, the
Class C Certificates, the Class D Certificates or the Class E Certificates. Even
if all of the conditions of the Underwriters Exemption are satisfied with
respect to the Class A Certificates, no assurance can be given that the
Underwriters Exemption would apply with respect to all transactions involving
the Class A Certificates or the assets of the Class A Trust. In particular, it
appears that the Underwriters Exemption would not apply to the purchase by Class
B Certificateholders, Class C Certificateholders, Class D Certificateholders or
Class E Certificateholders of Class A Certificates in connection with the
exercise of their rights upon the occurrence and during the continuance of a
Triggering Event. Therefore, the fiduciary of a Plan considering the purchase of
a Class A Certificate should consider the availability of the exemptive relief
provided by the Underwriters Exemption, as well as the availability of any other
exemptions with respect to transactions to which the Underwriters Exemption may
not apply.
By acceptance of a Class A Certificate, each Certificateholder that is a
Plan will be deemed to have represented that it is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Commission under the Securities
Act.
CLASS B, CLASS C, CLASS D AND CLASS E CERTIFICATES
The Class B Certificates, Class C Certificates, Class D Certificates and
Class E Certificates may not be acquired with the assets of a Plan; provided,
however, that such Certificates may be acquired with the assets of an insurance
company general account that may be deemed to contain Plan assets if the
conditions of Prohibited Transaction Class Exemption 95-60 (60 Fed. Reg. 35,925)
have been satisfied. By the acceptance of a Class B, C, D or E Certificates,
each Certificateholder will be deemed to have represented that either (i) no
Plan assets have been used to purchase such Certificate or (ii) the purchase and
holding of such Certificate is exempt from the prohibited transaction
restrictions of ERISA and the Code pursuant to PTCE 95-60.
EACH PLAN FIDUCIARY (AND EACH FIDUCIARY FOR A GOVERNMENTAL OR CHURCH PLAN
SUBJECT TO RULES SIMILAR TO THOSE IMPOSED ON PLANS UNDER ERISA) SHOULD CONSULT
WITH ITS LEGAL ADVISOR CONCERNING AN INVESTMENT IN ANY OF THE CERTIFICATES.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated November , 1996 with America West, GPA and certain U.S. domiciled
subsidiaries of GPA (the "Underwriting Agreement") the underwriters named below
(the "Underwriters") have severally agreed to purchase from the Trusts, at the
price set forth on the cover page of this Prospectus, Certificates of each Trust
in the initial aggregate principal amounts set forth in the following chart:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT OF
CLASS A CLASS B CLASS C CLASS D CLASS E
UNDERWRITERS CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
- -------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Morgan Stanley & Co.
Incorporated............ $ $ $ $ $
Citicorp Securities,
Inc. ...................
Lehman Brothers Inc.......
Salomon Brothers Inc......
------------ ------------ ------------ ------------ ------------
Total........... $100,661,333 $ 37,748,000 $ 37,748,000 $ 29,249,875 $ 13,152,846
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the Certificates is subject to
the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all of the
Certificates to be purchased by it if any are taken.
The Underwriters initially propose to offer all or part of the Certificates
directly to the public at the public offering price indicated on the cover page
of this Prospectus, and may offer a portion of the Certificates to dealers at a
price which represents a concession not in excess of the amounts set forth below
for the respective designations of the Certificates. The Underwriters may allow
to certain dealers, and such dealers may reallow, a concession not in excess of
the amounts set forth below for the respective designations of the Certificates.
After the initial public offering of the Certificates, the public offering
prices, such concessions and other selling terms may from time to time be varied
by the Underwriters.
<TABLE>
<CAPTION>
PASS THROUGH CONCESSION REALLOWANCE
CERTIFICATE DESIGNATIONS TO DEALERS CONCESSION
- ------------------------ ---------- -----------
<S> <C> <C>
Class A % %
Class B
Class C
Class D
Class E
</TABLE>
In connection with the sale of Certificates, Underwriters may be deemed to
have received compensation from America West or GPA in the form of commissions
and may also receive commissions from purchasers of Certificates for whom they
may act as agent. When the Underwriters sell the Certificates to or through
dealers, such dealers may receive commissions from the Underwriters and/or
commissions (which may be changed from time to time) from the purchasers for
whom they act as agent.
Underwriters, dealers and agents participating in the distribution of the
Certificates may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Certificates
may be deemed to be underwriting discounts and commissions under the Securities
Act.
The Underwriting Agreement provides that America West, on the one hand, and
GPA and certain GPA subsidiaries party thereto, on the other hand, will,
severally and not jointly, indemnify the Underwriters against certain
liabilities, including liabilities under applicable securities laws or will
contribute to payments the Underwriters may be required to make in respect
thereof. In addition GPA and such subsidiaries will reimburse the Underwriters
for certain of their expenses incurred in connection with the offering of the
Certificates, including certain fees and expenses of counsel for the
Underwriters.
115
<PAGE> 117
The Certificates are new securities for which there currently is no market.
America West does not intend to apply for listing of the Certificates on a
national securities exchange, but has been advised by the Underwriters that they
currently intend to make a market in the Certificates. No Underwriter is
obligated, however, to make a market in the Certificates, and any such
market-making may be discontinued at any time at the sole discretion of such
Underwriter. Accordingly, no assurance can be given as to the development or
liquidity of any market for the Certificates.
Certain of the Underwriters and their respective affiliates have provided
or are currently providing investment banking and other advisory or financial
services to America West and GPA and certain of their respective affiliates for
which they receive customary compensation, and may continue to provide such
services in the future.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") holds the Equipment
Trust Certificate. The proceeds from the offering of the Certificates will be
used to purchase Equipment Notes, a portion of the proceeds of which will repay
the Equipment Trust Certificate. Apart from stated interest on the Equipment
Trust Certificate, Morgan Stanley has received no fees in connection with its
purchase of the Equipment Trust Certificate.
Lehman Brothers Holdings Inc., the parent of Lehman, beneficially owned as
of November 6, 1996 1,831,223 shares of the Company's Class B Common Stock and
293,242 Warrants to purchase Class B Common Stock. See "Certain Transactions".
Citicorp Securities, Inc. ("Citicorp") held as of November 6, 1996 claims
aggregating over $11 million in the Company's Chapter 11 bankruptcy proceedings.
Upon settlement of these claims, Citicorp expects to receive shares of the
Company's Class B Common Stock. Additionally, Citicorp holds $1,750,000 of the
Company's 7.375% Senior Notes due August 1, 1998.
It is expected that delivery of the Certificates will be made against
payment therefor on or about the Closing Date, which will be the fifth business
day following the date of pricing of the Certificates (such settlement cycle
being herein referred to as "T+5"). Under Rule 15c6-1 under the Exchange Act,
trades in the secondary market generally are required to settle in three
business days, unless the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade Certificates on any day prior to the
third business day before the Closing Date will be required, by virtue of the
fact that the Certificates initially will settle in T+5, to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement.
Purchasers of Certificates who wish to trade Certificates on any day prior to
the third business day before the Closing Date should consult their own advisor.
LEGAL MATTERS
The validity of the Certificates offered hereby will be passed upon for
America West by Andrews & Kurth L.L.P., Houston, Texas, and for the Underwriters
by Milbank, Tweed, Hadley & McCloy, New York, New York. Certain federal income
tax matters with respect to the Trust and Certificateholders will be passed upon
by Andrews & Kurth L.L.P., special tax counsel to America West. The respective
counsel for America West and the Underwriters may rely upon Shipman & Goodwin
LLP, counsel to the Trustee, as to certain matters relating to the
authorization, execution and delivery of the Basic Agreement, each Trust
Supplement and the issuance of the Certificates.
116
<PAGE> 118
EXPERTS
The financial statements and financial statement schedule of America West
as of December 31, 1995 and 1994, for the year ended December 31, 1995, the
period August 26, 1994 to December 31, 1994, the period January 1, 1994 to
August 25, 1994 and for the year ended December 31, 1993, have been included
herein and in the Registration Statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
The reports of KPMG Peat Marwick LLP as of December 31, 1995 and 1994, for
the year ended December 31, 1995, the period August 26, 1994 to December 31,
1994, the period January 1, 1994 to August 25, 1994, and for the year ended
December 31, 1993 contain an explanatory paragraph that states the financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis than those of the Predecessor Company and therefore, are not
comparable in all respects.
The references to BK, AISI, and MBA, and to their respective appraisal
reports, dated as of July 2, 1996 in the case of BK, July 11, 1996 in the case
of AISI and July 12, 1996 in the case of MBA, are included herein in reliance
upon the authority of each such firm as an expert with respect to the matters
contained in its appraisal report.
117
<PAGE> 119
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
CONDENSED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1996
Condensed Balance Sheets as of September 30, 1996 (Unaudited) and December 31, 1995... F-2
Condensed Statements of Income for the three months ended September 30, 1996 and 1995
and the nine months ended September 30, 1996 and 1995 (Unaudited)................... F-4
Condensed Statements of Cash Flows for the nine months ended September 30, 1996 and
1995 (Unaudited).................................................................... F-5
Notes to Condensed Financial Statements............................................... F-6
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995
Independent Auditors' Report.......................................................... F-9
Balance Sheets as of December 31, 1995 and 1994....................................... F-10
Statements of Income for the year ended December 31, 1995 and for the periods August
26, 1994 to December 31, 1994, January 1, 1994 to August 25, 1994 and the year ended
December 31, 1993................................................................... F-11
Statements of Cash Flows for the year ended December 31, 1995 and for the periods
August 26, 1994 to December 31, 1994, January 1, 1994 to August 25, 1994 and the
year ended December 31, 1993........................................................ F-13
Statements of Stockholders' Equity (Deficiency) for the year ended December 31, 1995
and for the periods August 26, 1994 to December 31, 1994, January 1, 1994 to August
25, 1994 and the years ended December 31, 1993...................................... F-14
Notes to Financial Statements......................................................... F-15
</TABLE>
F-1
<PAGE> 120
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 149,635 $ 224,367
Short-term investments......................................... 50,899 --
Accounts receivable, less allowance for doubtful accounts of
$2,987 in 1996 and $2,515 in 1995........................... 61,209 69,094
Expendable spare parts and supplies, less allowance for
obsolescence of $1,842 in 1996 and $2,115 in 1995........... 20,472 28,643
Prepaid expenses............................................... 45,220 43,315
---------- ----------
Total current assets........................................ 327,435 365,419
---------- ----------
Property and equipment:
Flight equipment............................................... 637,309 546,591
Other property and equipment................................... 106,836 104,106
Equipment purchase deposits.................................... 46,803 27,489
---------- ----------
790,948 678,186
Less accumulated depreciation and amortization................. 141,139 76,123
---------- ----------
Total property and equipment................................ 649,809 602,063
---------- ----------
Other assets:
Restricted cash................................................ 24,796 31,694
Reorganization value in excess of amounts allocable to
identifiable assets, net.................................... 435,863 489,045
Deferred income taxes.......................................... 74,700 74,700
Other assets, net.............................................. 26,786 25,788
---------- ----------
Total other assets.......................................... 562,145 621,227
---------- ----------
$1,539,389 $1,588,709
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
F-2
<PAGE> 121
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........................... $ 46,242 $ 54,157
Accounts payable............................................... 125,603 89,157
Air traffic liability.......................................... 208,767 191,744
Accrued compensation and vacation benefits..................... 27,268 41,616
Accrued taxes.................................................. 16,705 34,359
Other accrued liabilities...................................... 39,317 24,802
------------- ------------
Total current liabilities................................... 463,902 435,835
------------- ------------
Long-term debt, less current maturities.......................... 336,235 373,964
Deferred credits and other liabilities........................... 129,757 129,438
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000 shares;
no shares issued............................................ -- --
Class A common stock, $.01 par value. Authorized 1,200,000
shares; issued and outstanding 1,200,000 shares............. 12 12
Class B common stock, $.01 par value. Authorized 100,000,000
shares; issued and outstanding 44,613,981 shares at
September 30, 1996 and 44,141,330 shares at December 31,
1995........................................................ 446 441
Additional paid-in capital..................................... 576,471 588,927
Retained earnings.............................................. 58,070 61,632
------------- ------------
634,999 651,012
Less treasury stock at cost, Class B Common Stock, 1,382,000
shares at September 30, 1996 and 112,000 shares at December
31, 1995.................................................... 25,504 1,540
------------- ------------
Total stockholders' equity.................................. 609,495 649,472
------------- ------------
$1,539,389 $1,588,709
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
F-3
<PAGE> 122
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ------------------------
1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Passenger.................................... $397,892 $384,420 $1,225,494 $1,082,858
Cargo........................................ 10,966 10,302 32,714 32,613
Other........................................ 13,660 13,905 41,409 38,862
-------- -------- ---------- ----------
Total operating revenues.................. 422,518 408,627 1,299,617 1,154,333
-------- -------- ---------- ----------
Operating expenses:
Salaries and related costs................... 98,572 98,818 290,894 283,869
Aircraft rents............................... 51,855 44,442 148,993 128,927
Other rents and landing fees................. 28,420 27,818 82,251 81,276
Aircraft fuel................................ 60,456 44,183 165,775 126,664
Agency commissions........................... 32,390 32,822 99,596 93,147
Aircraft maintenance materials and repairs... 34,151 17,856 90,382 44,735
Depreciation and amortization................ 12,895 12,460 39,615 36,374
Amortization of reorganization value in
excess of amounts allocable to
identifiable assets....................... 6,081 7,858 19,181 24,274
Nonrecurring special charge.................. 65,098 -- 65,098 --
Other........................................ 85,743 68,210 254,574 203,055
-------- -------- ---------- ----------
Total operating expenses.................. 475,661 354,467 1,256,359 1,022,321
-------- -------- ---------- ----------
Operating income (loss)................... (53,143) 54,160 43,258 132,012
-------- -------- ---------- ----------
Nonoperating income (expenses):
Interest income.............................. 3,026 4,155 9,557 11,114
Interest expense............................. (10,933) (14,003) (34,910) (45,461)
Gain (loss) on disposition of property and
equipment................................. (140) (1,290) 261 (2,515)
Other, net................................... (330) 91 (476) 128
-------- -------- ---------- ----------
Total nonoperating expenses, net............... (8,377) (11,047) (25,568) (36,734)
-------- -------- ---------- ----------
Income (loss) before income taxes (benefit) and
extraordinary item........................... (61,520) 43,113 17,690 95,278
-------- -------- ---------- ----------
Income taxes (benefit)......................... (15,813) 20,414 20,148 46,496
-------- -------- ---------- ----------
Extraordinary item, net of taxes............... -- (984) (1,105) (984)
-------- -------- ---------- ----------
Net income (loss).............................. $(45,707) $ 21,715 $ (3,563) $ 47,798
======== ======== ========= =========
Earnings (loss) per share:
Primary:
Income (loss) before extraordinary item... $ (1.03) $ 0.48 $ (0.05) $ 1.06
Extraordinary item........................ -- (0.02) (0.03) (0.02)
-------- -------- ---------- ----------
Net income (loss)....................... $ (1.03) $ 0.46 $ (0.08) $ 1.04
======== ======== ========= =========
Fully diluted:
Income (loss) before extraordinary item... $ (1.03) $ 0.47 $ (0.05) $ 1.05
Extraordinary item........................ -- (0.02) (0.03) (0.02)
-------- -------- ---------- ----------
Net income (loss)....................... $ (1.03) $ 0.45 $ (0.08) $ 1.03
======== ======== ========= =========
Shares used for computation:
Primary...................................... 44,381 48,728 45,065 46,354
======== ======== ========= =========
Fully diluted................................ 44,381 48,728 45,065 48,256
======== ======== ========= =========
</TABLE>
See accompanying notes to condensed financial statements.
F-4
<PAGE> 123
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ (3,563) $ 47,798
Adjustments to reconcile net income (loss) to cash provided by
operating activities:
Depreciation and amortization.................................. 39,615 36,374
Amortization of reorganization value in excess of amounts
allocable to identifiable assets.............................. 19,181 24,274
Amortization of capitalized maintenance........................ 26,080 6,647
Amortization of deferred credits............................... (8,924) (8,121)
Loss (gain) on disposition of property and equipment........... (261) 2,515
Nonrecurring special charge.................................... 65,098 --
Extraordinary loss on extinguishment of debt, net of taxes..... 1,105 984
Other.......................................................... 1,833 3,433
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net................ 7,885 (34,275)
Increase in spare parts and supplies, net...................... (2,842) (4,395)
Decrease (increase) in prepaid expenses, net................... 858 (12,535)
Decrease in other assets and restricted cash................... 39,097 37,907
Increase in accounts payable................................... 36,446 13,073
Increase in air traffic liability.............................. 17,023 100,070
Increase (decrease) in accrued compensation and vacation
benefits...................................................... (14,348) 12,051
Increase (decrease) in accrued taxes........................... (17,654) 27,146
Increase (decrease) in other accrued liabilities............... 1,752 (172)
Decrease in other liabilities.................................. (7,819) (7,601)
--------- --------
Net cash provided by operating activities.................... 200,562 245,173
Cash flows from investing activities:
Purchases of property and equipment............................... (117,388) (81,102)
Increase in short-term investments................................ (50,899) --
Other............................................................. (1,659) (153)
--------- --------
Net cash used in investing activities........................ (169,946) (81,255)
Cash flows from financing activities:
Repayment of debt................................................. (66,171) (96,654)
Exercise of stock options and warrants............................ 2,928 9
Acquisition of treasury stock..................................... (23,964) --
Acquisition of warrants........................................... (18,141) --
--------- --------
Net cash used in financing activities........................ (105,348) (96,645)
--------- --------
Net increase (decrease) in cash and cash equivalents......... (74,732) 67,273
--------- --------
Cash and cash equivalents at beginning of period.................... 224,367 182,581
--------- --------
Cash and cash equivalents at end of period.......................... $ 149,635 $249,854
========= ========
Cash and cash equivalents and short-term investments at end of
period............................................................ $ 200,534 $249,854
========= ========
</TABLE>
See accompanying notes to condensed financial statements.
F-5
<PAGE> 124
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION
The unaudited condensed financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission but do not include all information and footnotes
required by generally accepted accounting principles. In the opinion of
management, the condensed financial statements reflect all adjustments, which
are of a normal recurring nature, necessary for a fair presentation. Certain
prior year amounts have been reclassified to conform with the current year
presentation. The accompanying condensed financial statements should be read in
conjunction with the financial statements and related notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
2. SHORT-TERM INVESTMENTS
Short-term investments consist of cash invested in certain debt securities
with maturities greater than 90 days. The debt securities are classified as
held-to-maturity and are carried at amortized cost which approximates fair
value.
3. RESTRICTED STOCK AND STOCK OPTIONS
Under the America West Airlines, Inc. 1994 Incentive Equity Plan
("Incentive Plan"), up to 3,500,000 shares of Class B Common Stock may be issued
to cover awards under the Incentive Plan, of which no more than 1,500,000 will
be issued as restricted stock or bonus stock. As of September 30, 1996, 199,334
shares of restricted stock and options to purchase 2,316,000 shares of Class B
Common Stock at the fair market value on the date of grant (which range from
$8.75 to $23.00) had been granted pursuant to the Incentive Plan. Also, options
to purchase 117,000 shares of Class B Common Stock at the fair market value on
the date of grant (which range from $8.00 to $19.625) were issued to members of
the Board of Directors who are not employees of the Company. As of September 30,
1996, 73,889 shares of restricted stock were vested and 700,002 options to
purchase shares of Class B Common Stock were exercisable.
4. COMMON STOCK AND WARRANTS
In September 1995, the Board of Directors authorized the purchase of up to
2.5 million shares of Class B Common Stock and all of its publicly traded
Warrants on the open market over a two-year period. In July 1996, the Company
purchased 500,000 shares of Class B Common Stock at per share prices ranging
from $14.50 to $16.63. As of September 30, 1996, 1,382,000 shares of Class B
Common Stock and 2.2 million Warrants have been repurchased. The repurchased
shares are held as treasury shares by the Company.
5. INCOME TAXES
The Company recorded income tax expense (benefit) (exclusive of
extraordinary item) as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- -------------------
1996 1995 1996 1995
-------- ------- ------- -------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Current taxes:
Federal........................................ $ (658) $ 660 $ 404 $ 1,274
State.......................................... (588) 1,252 362 2,420
-------- ------- ------- -------
(1,246) 1,912 766 3,694
Deferred taxes................................... -- -- -- --
Income tax expense (benefit) attributable to
reorganization items and other................. (14,567) 18,502 19,382 42,802
-------- ------- ------- -------
Income tax expense............................... $(15,813) $20,414 $20,148 $46,496
======== ======= ======= =======
</TABLE>
F-6
<PAGE> 125
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1996
As reflected in the above table, income tax expense (benefit) pertains both
to income (loss) before extraordinary item as well as certain fresh start
adjustments to the Company's financial statements stemming from the Company's
reorganization in 1994. The Company's reorganization gave rise to significant
items of expense for financial reporting purposes that are not deductible for
income tax purposes. In large measure, it is these nondeductible (for income tax
purposes) expenses that result in income tax expense (for financial reporting
purposes) significantly greater than taxes computed at the current U.S.
corporate statutory rate of 35 percent. Nevertheless, the Company's actual cash
income tax liability (i.e., income taxes payable) is considerably lower than
income tax expense shown for financial reporting purposes.
6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Cash paid for interest and income taxes:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
------- -------
<S> <C> <C>
(IN THOUSANDS)
Interest (net of amounts capitalized of $2,404 in 1996 and $2,044 in
1995).............................................................. $31,300 $42,734
Income taxes......................................................... 498 60
</TABLE>
Non-cash investing and financing activities:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
------- -------
<S> <C> <C>
(IN THOUSANDS)
Notes payable........................................................ $19,250 $ 5,723
Exchange of debt..................................................... -- 75,000
</TABLE>
7. NONRECURRING SPECIAL CHARGE
During the third quarter of 1996, the Company recorded a nonrecurring
special charge of approximately $65.1 million.
Approximately $49.7 million of the charge was associated with the Company's
renegotiation of an aircraft purchase agreement with AVSA S.A.R.L., an affiliate
of Airbus Industrie ("AVSA"), the re-evaluation of its facilities, and
completing its plan for the disposition of certain aircraft inventories and
equipment. The charge includes $18.8 million for cancellation penalty payments;
write-off of capitalized interest on advance payments; a provision for
maintenance costs on certain leased aircraft currently scheduled to be returned
due to accelerated deliveries under the new agreement; $7.5 million to reduce
the carrying value to estimated fair value of certain under-utilized facilities
and $23.4 million to write-down certain aircraft related inventories and
equipment to estimated fair value.
The remaining $15.4 million of the charge represents loss contingencies
based on estimated settlements of pending and threatened litigation. (See Note
8 -- Commitments and Contingencies.)
The $65.1 million represents the Company's best estimate of the expected
charge. However, the actual charge may be different from the amount estimated.
8. COMMITMENTS AND CONTINGENCIES
Certain administrative and priority tax claims are pending against the
Company which, if ultimately allowed by the bankruptcy court, would represent
general obligations of the Company. Such claims include claims of various state
and local tax authorities and certain potential contractual indemnification
obligations.
F-7
<PAGE> 126
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1996
The Company is also a defendant in various lawsuits. Management cannot
reasonably predict the outcome of the pending lawsuits and administrative and
priority tax claims. However, management believes, after considering a number of
factors, including the advice of outside counsel, the nature of the
contingencies to which the Company is subject and its prior experience, that
although the outcome of those matters could adversely affect future operating
results, the resolution of these actions will not have a material adverse effect
on the Company's financial condition.
9. SUBSEQUENT EVENTS
PROPOSED FINANCING TRANSACTION
On October 23, 1996 the Company filed a Registration Statement on Form S-3
(the "Registration Statement") with the Securities and Exchange Commission (the
"SEC"). On November 8, 1996, the Company filed Amendment No. 1 and on November
19, 1996, the Company filed Amendment No. 2 to the Registration Statement with
the SEC. The Registration Statement relates to pass-through certificates, as
referred to below which are proposed to be issued in connection with the
refinancing of the current indebtedness of the owner/lessors of eight aircraft
and three spare engines currently subleased by the Company. In connection with
these refinancings, the Company will lease such aircraft and spare engines
directly from the owner trusts that are the owners/lessors (the "Owner Trusts")
rather than directly from the equipment provider. The lower borrowing costs
anticipated to be obtained in the refinancing will lower America West's leasing
costs by approximately $8 million over the 15 year life of the leases. In
connection with the refinancing pass-through trusts ("Trusts") will be created
to hold new non-recourse equipment notes issued by the Owner Trusts. The Trusts
will issue pass-through certificates representing interests in the equipment
notes. Inasmuch as (i) the owner/lessor has a substantial investment in the
equipment, (ii) the equipment notes are secured by the rentals payable by
America West, and (iii) neither the equipment notes nor the pass-through
certificates are direct obligations of, or guaranteed by, America West, the
Trusts (and the corresponding debt and interest expense) will not be included in
the Company's financial statements.
F-8
<PAGE> 127
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
America West Airlines, Inc.
We have audited the accompanying balance sheets of America West Airlines,
Inc. as of December 31, 1995 and 1994, and the related statements of income,
cash flows and stockholders' equity (deficiency) for the year ended December 31,
1995, the period August 26, 1994 through December 31, 1994, the period January
1, 1994 through August 25, 1994, and for the year ended December 31, 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of America West Airlines, Inc.
as of December 31, 1995 and 1994, the results of its operations and its cash
flows for the year ended December 31, 1995, the period August 26, 1994 through
December 31, 1994, the period January 1, 1994 through August 25, 1994 and for
the year ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in Notes 14 and 15 to the financial statements, on August 25,
1994, America West Airlines, Inc. emerged from bankruptcy. The financial
statements of the Reorganized Company reflect the impact of adjustments to
reflect the fair value of assets and liabilities under fresh start reporting. As
a result, the financial statements of the Reorganized Company are presented on a
different basis of accounting than those of the Predecessor Company and,
therefore, are not comparable in all respects.
KPMG Peat Marwick LLP
Phoenix, Arizona
March 20, 1996
F-9
<PAGE> 128
AMERICA WEST AIRLINES, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 224,367 $ 182,581
Accounts receivable, less allowance for doubtful accounts of $2,515 in 1995
and $3,531 in 1994......................................................... 69,094 57,474
Expendable spare parts and supplies, less allowance for obsolescence of
$2,115 in 1995 and $483 in 1994............................................ 28,643 24,179
Prepaid expenses............................................................. 43,315 29,284
---------- ----------
Total current assets.................................................. 365,419 293,518
---------- ----------
Property and equipment:
Flight equipment............................................................. 546,591 452,177
Other property and equipment................................................. 104,106 92,169
Equipment purchase deposits.................................................. 27,489 26,074
---------- ----------
678,186 570,420
Less accumulated depreciation and amortization............................... 76,123 15,882
---------- ----------
Total property and equipment.......................................... 602,063 554,538
---------- ----------
Other assets:
Restricted cash.............................................................. 31,694 28,578
Reorganization value in excess of amounts allocable to identifiable assets,
net........................................................................ 489,045 645,703
Deferred income taxes........................................................ 74,700 --
Other assets, net............................................................ 25,788 22,755
---------- ----------
Total other assets.................................................... 621,227 697,036
---------- ----------
$1,588,709 $1,545,092
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt......................................... $ 54,157 $ 65,198
Accounts payable............................................................. 89,157 77,569
Air traffic liability........................................................ 191,744 127,356
Accrued compensation and vacation benefits................................... 41,616 15,776
Accrued taxes................................................................ 34,359 27,061
Other accrued liabilities.................................................... 24,802 28,485
---------- ----------
Total current liabilities............................................. 435,835 341,445
---------- ----------
Long-term debt, less current maturities........................................ 373,964 465,598
Deferred credits and other liabilities......................................... 129,438 142,603
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 48,800,000 shares; no shares
issued..................................................................... -- --
Class A common stock, $.01 par value. Authorized 1,200,000 shares; issued and
outstanding 1,200,000 shares............................................... 12 12
Class B common stock, $.01 par value. Authorized 100,000,000 shares; issued
and outstanding 44,141,330 shares in 1995, and 43,936,272 shares in 1994... 441 439
Additional paid-in capital................................................... 588,927 587,149
Retained earnings............................................................ 61,632 7,846
---------- ----------
651,012 595,446
Less treasury stock, 112,000 shares of Class B common stock at cost.......... (1,540) --
---------- ----------
Total stockholders' equity............................................ 649,472 595,446
---------- ----------
$1,588,709 $1,545,092
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-10
<PAGE> 129
AMERICA WEST AIRLINES, INC.
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
REORGANIZED COMPANY ----------------------------
----------------------------- PERIOD FROM
PERIOD FROM JANUARY 1
YEAR ENDED AUGUST 26 TO TO YEAR ENDED
DECEMBER 31, DECEMBER 31, AUGUST 25, DECEMBER 31,
1995 1994 1994 1993
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Operating revenues:
Passenger.............................. $1,452,261 $ 437,775 $ 882,140 $1,246,564
Cargo.................................. 44,425 16,648 27,645 40,161
Other.................................. 53,956 15,343 29,243 38,639
---------- -------- --------- ----------
Total operating revenues............ 1,550,642 469,766 939,028 1,325,364
---------- -------- --------- ----------
Operating expenses:
Salaries and related costs............. 382,032 117,562 213,722 305,429
Aircraft rents......................... 173,571 54,983 105,547 164,978
Other rents and landing fees........... 108,264 35,839 68,163 109,730
Aircraft fuel.......................... 174,195 58,165 100,646 166,313
Agency commissions..................... 124,146 37,265 78,988 106,368
Aircraft maintenance materials and
repairs............................. 65,925 17,590 28,109 31,000
Depreciation and amortization.......... 81,041 26,684 56,694 81,894
Restructuring charge................... 10,500 -- -- --
Other.................................. 276,236 82,807 179,653 238,598
---------- -------- --------- ----------
Total operating expenses............ 1,395,910 430,895 831,522 1,204,310
---------- -------- --------- ----------
Operating income.................... 154,732 38,871 107,506 121,054
---------- -------- --------- ----------
Nonoperating income (expenses):
Interest income........................ 15,045 3,834 470 728
Interest expense (contractual interest
of $44,747 and $72,961 for the
periods ended August 25, 1994 and
December 31, 1993, respectively).... (58,598) (22,636) (33,998) (54,192)
Loss on disposition of property and
equipment........................... (2,734) (398) (1,659) (4,562)
Reorganization expense, net............ -- -- (273,659) (25,015)
Other, net............................. (67) 65 131 (89)
---------- -------- --------- ----------
Total nonoperating expenses, net.... (46,354) (19,135) (308,715) (83,130)
---------- -------- --------- ----------
Income (loss) before income taxes
and extraordinary items........... 108,378 19,736 (201,209) 37,924
---------- -------- --------- ----------
Income taxes............................. 53,608 11,890 2,059 759
---------- -------- --------- ----------
Income (loss) before extraordinary
items............................. 54,770 7,846 (203,268) 37,165
---------- -------- --------- ----------
Extraordinary items, net of tax.......... (984) -- 257,660 --
---------- -------- --------- ----------
Net income.......................... $ 53,786 $ 7,846 $ 54,392 $ 37,165
========== ======== ========= ==========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE> 130
AMERICA WEST AIRLINES, INC.
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
REORGANIZED COMPANY PREDECESSOR COMPANY
--------------------------- ---------------------------
PERIOD FROM PERIOD FROM
YEAR ENDED AUGUST 26 TO JANUARY 1 TO YEAR ENDED
DECEMBER 31, DECEMBER 31, AUGUST 25, DECEMBER 31,
1995 1994 1994 1993
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Earnings (loss) per share:
Primary:
Income (loss) before
extraordinary items..... $ 1.18 $ .17 $(7.03) $ 1.50
Extraordinary items....... (.02) -- 9.02 --
------ ------ ------ ------
Net income................ $ 1.16 $ .17 $ 1.99 $ 1.50
====== ====== ====== ======
Fully Diluted:
Income (loss) before
extraordinary items..... $ 1.17 $ .17 $(4.96) $ 1.04
Extraordinary items....... (.02) -- 6.37 --
------ ------ ------ ------
Net income................ $ 1.15 $ .17 $ 1.41 $ 1.04
====== ====== ====== ======
Shares used for computation:
Primary................... 47,666 45,127 28,550 27,525
====== ====== ====== ======
Fully diluted............. 47,666 45,127 40,452 41,509
====== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-12
<PAGE> 131
AMERICA WEST AIRLINES, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
REORGANIZED COMPANY ----------------------------
----------------------------- PERIOD FROM
PERIOD FROM JANUARY 1
YEAR ENDED AUGUST 26 TO TO YEAR ENDED
DECEMBER 31, DECEMBER 31, AUGUST 25, DECEMBER 31,
1995 1994 1994 1993
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income....................................... $ 53,786 $ 7,846 $ 54,392 $ 37,165
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization................. 49,083 15,538 56,694 81,894
Amortization of deferred overhauls............ 11,934 356 -- --
Amortization of reorganization value in excess
of amounts allocable to identifiable
assets...................................... 31,958 11,145 -- --
Amortization of deferred credits.............. (10,952) (3,961) (2,966) (5,186)
Loss on disposition of property and
equipment................................... 2,734 398 1,659 4,562
Reorganization items.......................... -- -- 185,226 18,167
Extraordinary items........................... 984 -- (257,660) --
Other......................................... 4,465 1,178 (383) (554)
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable,
net......................................... (11,172) 27,439 (18,769) (927)
Decrease (increase) in expendable spare parts
and supplies, net........................... (4,819) 1,165 397 6,320
Decrease (increase) in prepaid expenses....... (14,031) 4,371 1,284 2,627
Decrease (increase) in other assets, net...... 45,601 1,219 12,971 (5,295)
Increase (decrease) in accounts payable....... 10,308 (17,289) (15,557) 9,014
Increase (decrease) in air traffic
liability................................... 64,388 (26,452) 30,510 8,749
Increase (decrease) in accrued compensation
and vacation benefits....................... 25,840 (11,667) 15,739 (1,300)
Increase (decrease) in accrued taxes.......... 7,298 (2,104) 25,999 (1,764)
Increase (decrease) in other accrued
liabilities................................. (663) (13,785) 67,429 644
Increase (decrease) in other liabilities...... (6,314) 2,521 (14,749) (758)
--------- -------- --------- --------
Net cash provided by (used in) operating
activities............................... 260,428 (2,082) 142,216 153,358
Cash flows from investing activities:
Purchases of property and equipment.............. (107,387) (14,658) (61,271) (54,324)
Long-term investments............................ (1,750) -- -- --
Proceeds from disposition of property............ 1,741 600 334 3,715
--------- -------- --------- --------
Net cash used in investing activities....... (107,396) (14,058) (60,937) (50,609)
Cash flows from financing activities:
Proceeds from issuance of debt................... 29,300 -- 100,000 --
Repayment of debt................................ (137,421) (23,355) (173,699) (77,501)
Issuance of common stock......................... 1,545 3 114,862 --
Debt issuance cost............................... (3,130) -- -- --
Acquisition of treasury stock.................... (1,540) -- -- --
--------- -------- --------- --------
Net cash provided by (used in) financing
activities............................... (111,246) (23,352) 41,163 (77,501)
--------- -------- --------- --------
Net increase (decrease) in cash and cash
equivalents.............................. 41,786 (39,492) 122,442 25,248
--------- -------- --------- --------
Cash and cash equivalents at beginning of period... 182,581 222,073 99,631 74,383
--------- -------- --------- --------
Cash and cash equivalents at end of period......... $ 224,367 $182,581 $ 222,073 $ 99,631
========= ======== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-13
<PAGE> 132
AMERICA WEST AIRLINES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEAR ENDED DECEMBER 31, 1995, THE PERIOD AUGUST 26 TO DECEMBER 31, 1994,
THE PERIOD JANUARY 1 TO AUGUST 25, 1994 AND THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DEFERRED
COMPENSATION
CLASS CLASS AND NOTES
CONVERTIBLE A B ADDITIONAL RETAINED CLASS B RECEIVABLE --
PREFERRED COMMON COMMON COMMON PAID-IN EARNINGS/ TREASURY EMPLOYEE STOCK
STOCK STOCK STOCK STOCK CAPITAL (DEFICIT) STOCK PURCHASE PLANS TOTAL
----------- ------ ------ ------- ---------- --------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
1993................. $ 91 $ -- $ -- $5,992 $195,407 $(475,791) $ -- $(20,312) $(294,613)
---- --- ---- ------- -------- --------- ------- -------- ---------
Issuance of 170,173
shares of common
stock pursuant to
Series B convertible
subordinated
debentures........... -- -- -- 43 1,896 -- -- -- 1,939
Issuance of 1,164,596
shares of common
stock pursuant to
convertible preferred
stock................ (73) -- -- 291 (218) -- -- -- --
Employee restricted
stock deferred
compensation......... -- -- -- -- -- -- -- 21 21
Employee stock purchase
plan:
Cancellation of
11,330 shares of
common stock at:
$.22 - $1.59 per
share............ -- -- -- (3) (38) -- -- 49 8
Deferred
compensation..... -- -- -- -- (37) -- -- 1,255 1,218
Net income............. -- -- -- -- -- 37,165 -- -- 37,165
---- --- ---- ------- -------- --------- ------- -------- ---------
BALANCE AT DECEMBER 31,
1993................. 18 -- -- 6,323 197,010 (438,626) -- (18,987) (254,262)
---- --- ---- ------- -------- --------- ------- -------- ---------
Issuance of 336,277
shares of common
stock pursuant to
convertible preferred
stock dividends...... -- -- -- 84 2,932 -- -- -- 3,016
Employee stock purchase
plan:
Cancellation of 7,678
shares of common
stock at:
$1.19 - $4.03 per
share............ -- -- -- (2) (49) -- -- 43 (8)
Deferred
compensation..... -- -- -- -- (1) -- -- 606 605
Issuance of 108,825
shares of common
stock pursuant to
exercise of stock
options.............. -- -- -- 27 166 -- -- -- 193
Net income............. -- -- -- -- -- 54,392 -- -- 54,392
Eliminate predecessor
equity accounts in
connection with fresh
start................ (18) -- -- (6,432) (200,058) 206,508 -- -- --
Eliminate employee
stock receivable..... -- -- -- -- -- (18,338) -- 18,338 --
Record excess of
reorganization value
over identifiable
assets............... -- -- -- -- -- 668,702 -- -- 668,702
Sale of 1,200,000
shares of Class A
common stock and
14,000,000 shares of
Class B common
stock................ -- 12 140 -- 114,710 -- -- -- 114,862
Issuance of 29,925,000
shares of new Class B
common stock......... -- -- 299 -- 472,339 (472,638) -- -- --
---- --- ---- ------- -------- --------- ------- -------- ---------
BALANCE AT AUGUST 25,
1994................. -- 12 439 -- 587,049 -- -- -- 587,500
---- --- ---- ------- -------- --------- ------- -------- ---------
Issuance of 272 shares
of common stock
pursuant to exercise
of stock warrants.... -- -- -- -- 3 -- -- -- 3
Issuance of 11,000
shares of restricted
stock................ -- -- -- -- 97 -- -- -- 97
Net income............. -- -- -- -- -- 7,846 -- -- 7,846
---- --- ---- ------- -------- --------- ------- -------- ---------
BALANCE AT DECEMBER 31,
1994................. -- 12 439 -- 587,149 7,846 -- -- 595,446
---- --- ---- ------- -------- --------- ------- -------- ---------
Issuance of 4,057
shares and 170,667
shares of common
stock pursuant to the
exercise of stock
warrants and stock
options including tax
benefit from the
exercise of stock
options of $44,000... -- -- 2 -- 1,543 -- -- -- 1,545
Issuance of 30,334
shares of restricted
stock................ -- -- -- -- 235 -- -- -- 235
Acquisition of 112,000
shares of treasury
stock at:
$13.63 - $14.00 per
share............ -- -- -- -- -- -- (1,540) -- (1,540)
Net income............. -- -- -- -- -- 53,786 -- -- 53,786
---- --- ---- ------- -------- --------- ------- -------- ---------
BALANCE AT DECEMBER 31,
1995................. $ -- $ 12 $441 $ -- $588,927 $ 61,632 $(1,540) $ -- $ 649,472
==== === ==== ======= ======== ========= ======= ======== =========
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE> 133
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994, AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
America West Airlines, Inc., D.I.P. (the "Predecessor Company") filed a
voluntary petition on June 27, 1991, to reorganize under Chapter 11 of the
Federal Bankruptcy Code. On August 10, 1994, the Plan of Reorganization
("Plan"), filed by the Predecessor Company, was confirmed and became effective
on August 25, 1994 (the "Effective Date"). On August 25, 1994, America West
Airlines, Inc., (the "Reorganized Company" or the "Company") adopted fresh start
reporting in accordance with Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization under the Bankruptcy Code" ("SOP 90-7") of the
American Institute of Certified Public Accountants. Accordingly, the Company's
post-reorganization balance sheet and statements of income have not been
prepared on a consistent basis with such pre-reorganization financial statements
and are not comparable in all respects to financial statements prior to
reorganization. For accounting purposes, the inception date of the Reorganized
Company is deemed to be August 26, 1994. A vertical black line is shown in the
financial statements to separate the Reorganized Company from the Predecessor
Company since they have not been prepared on a consistent basis of accounting.
During the reorganization period, pursuant to SOP 90-7, prepetition
liabilities were reported on the basis of the expected amounts of such allowed
claims, as opposed to the amounts for which those allowed claims may be settled
and were classified as "Liabilities Subject to Chapter 11 Proceedings". The
accrual for interest on such unsecured or undersecured liabilities was
discontinued from the period June 27, 1991 to August 25, 1994, the Effective
Date of the Plan.
(b) Cash and Cash Equivalents
Cash equivalents consist of all highly liquid debt instruments purchased
with original maturities of three months or less. The debt instruments are
classified as held-to-maturity and are carried at amortized cost which
approximates fair value.
(c) Expendable Spare Parts and Supplies
Flight equipment expendable spare parts and supplies are valued at average
cost. Allowances for obsolescence are provided, over the estimated useful life
of the related aircraft and engines, for spare parts expected to be on hand at
the date the aircraft are retired from service.
(d) Property and Equipment
Property and equipment are recorded at cost. Interest capitalized on
advance payments for aircraft acquisitions and on expenditures for aircraft
improvements are part of these costs. Interest capitalized was $2.7 million and
$621,000 for the year ended December 31, 1995 and the period August 26, 1994
through December 31, 1994, respectively. Property and equipment is depreciated
and amortized to residual values over the estimated useful lives or the lease
term, whichever is less, using the straight-line method.
The estimated useful lives for the Company's ground property and equipment
range from three to twelve years for owned property and equipment and to thirty
years for the reservation and training center and technical support facilities.
The estimated useful lives of the Company's owned aircraft, jet engines, flight
equipment and rotable parts range from eleven to twenty-two years. Leasehold
improvements relating to flight equipment and other property on operating leases
are amortized over the life of the lease or the life of the asset, whichever is
shorter.
F-15
<PAGE> 134
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(e) Restricted Cash
Restricted cash includes cash deposits securing certain letters of credit
and cash held in Company accounts, but pledged to an institution which processes
credit card sales transactions.
(f) Aircraft Maintenance and Repairs
Routine maintenance and repairs are charged to expense as incurred. The
cost of major scheduled airframe, engine and certain component overhauls are
capitalized and amortized over the periods benefited and are included in
aircraft maintenance materials and repairs expense for the Reorganized Company
as part of fresh start reporting and in depreciation and amortization expense
for the Predecessor Company. The balance of capitalized overhauls relating to
aircraft and engines was reduced as part of the revaluation of property and
equipment and operating leases under fresh start reporting.
Additionally, a provision for the estimated cost of scheduled airframe and
engine overhauls required to be performed on leased aircraft prior to their
return to the lessors has been provided.
(g) Reorganization Value in Excess of Amounts Allocable to Identifiable Assets
Reorganization value in excess of amounts allocable to identifiable assets
is amortized on a straight line basis over 20 years. Accumulated amortization at
December 31, 1995 and 1994 is approximately $43.1 million and $11.1 million,
respectively. During the year ended December 31, 1995 and the period August 26
to December 31, 1994, reductions in reorganization value of $50 million and
$11.9 million were recorded as a result of the utilization of the Predecessor
Company tax attributes including net operating loss carryforwards. Additionally,
in 1995 the Company established a deferred tax asset, which reduced
reorganization value by $74.7 million. The Company assesses the recoverability
of this asset based upon expected future undiscounted cash flows and other
relevant information.
(h) Frequent Flyer Awards
The Company maintains a frequent travel award program known as "FlightFund"
that provides a variety of awards to program members based on accumulated
mileage. The estimated cost of providing the free travel, using the incremental
cost method as adjusted for estimated redemption rates, is recognized as a
liability and charged to operations as program members accumulate mileage.
(i) Deferred Credit -- Operating Leases
Operating leases were adjusted to fair market value at the Effective Date.
The net present value of the difference between the stated lease rates and the
fair market rates has been recorded as a deferred credit in the accompanying
balance sheets. The deferred credit will be increased through charges to
interest expense and decreased on a straight-line basis as a reduction in rent
expense over the applicable lease periods. At December 31, 1995 and 1994, the
unamortized balance of the deferred credit was $107.2 million and $116.9
million, respectively.
(j) Passenger Revenue
Passenger revenue is recognized when the transportation is provided. Ticket
sales for transportation which has not yet been provided are recorded as air
traffic liability. Passenger traffic commissions and related fees are expensed
when the related revenue is recognized. Passenger traffic commissions and
related fees not yet recognized are included as a prepaid expense.
F-16
<PAGE> 135
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(k) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(l) Per Share Data
Primary earnings per share is based upon the weighted average number of
shares of common stock outstanding and dilutive common stock equivalents (stock
options and warrants). Primary earnings per share reflects net income adjusted
for interest on borrowings effectively reduced by the proceeds from the assumed
exercise of common stock equivalents but only if the effect of such adjustments
are dilutive.
Fully diluted earnings per share is based on the average number of shares
of common stock, dilutive common stock equivalents (stock options and warrants)
and the conversion of outstanding convertible preferred stock (none outstanding
at December 31, 1995) as well as for the Predecessor Company the conversion of
convertible subordinated debentures. Fully diluted earnings per share reflects
net income adjusted for interest on borrowings effectively reduced by the
proceeds from the assumed exercise of common stock equivalents or conversion of
debentures but only if the effect of such adjustments are dilutive.
(m) Use of Estimates
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(n) Reclassification
Certain reclassifications have been made in the prior year's financial
statements to conform them to the current presentation.
F-17
<PAGE> 136
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. LONG-TERM DEBT
Long-term debt at December 31 consists of the following:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
SECURED
Notes payable, primarily fixed interest rates of 9.53% to 10.79%,
averaging 10.1%, installments due 1999 through 2008.................. $274,751 $307,077
Borrowings under lines of credit, floating interest rates of Prime + 1%
to three month LIBOR + 4%, averaging 9.61%,installments due through
1999. No available borrowings remain................................. 14,794 24,225
Industrial development revenue bonds, variable interest rate of 4.25%
to 5.6%, averaging 4.94%, due 2016(a)................................ 29,300 --
Notes payable, floating interest rate of Prime + 1%, averaging 8.50%,
installments due through 1999(a)..................................... -- 34,097
-------- --------
318,845 365,399
UNSECURED
10 3/4% Senior Notes, face amount of $75 million, interest only payment
until due in 2005(b)................................................. 71,984 --
Notes payable, interest rates of 90-day LIBOR + 3% to 8%, averaging
8.25%, installments due through 2000................................. 36,708 41,752
11 1/4% Senior notes, face amount of $123 million, interest only
payments until due in 2001(b)........................................ -- 120,843
Other.................................................................. 584 2,802
-------- --------
109,276 165,397
-------- --------
Total long-term debt......................................... 428,121 530,796
Less: current maturities..................................... 54,157 65,198
-------- --------
$373,964 $465,598
======== ========
</TABLE>
- ---------------
(a) In December 1995, the Company completed the remarketing of The Industrial
Development Authority of the City of Phoenix, Arizona Variable Rate Airport
Facility Revenue Bonds (America West Airlines, Inc. Project) Series 1986
due August 1, 2016. These bonds were originally issued to finance the
construction of the Company's maintenance facility at Sky Harbor
International Airport. As required under the existing reimbursement
agreement, the Company used the net proceeds to prepay the then existing
debt in the amount of $28.9 million. The new bonds are backed by an
irrevocable direct pay letter of credit issued by the Industrial Bank of
Japan, Limited, Los Angeles Agency; the letter of credit is secured by the
Company's maintenance facility and related improvements, seventeen spare
engines and a flight simulator with a combined net book value of $51.2
million and a pledge of $1.9 million in cash.
The interest rate varies weekly and from the date of issue to December 31,
1995 ranged from 4.25% to 5.6%. The bondholders have the right to put the
bonds back to the Company on a weekly basis if the bonds bear interest at
the weekly rate or monthly if the bonds bear interest at a monthly rate. If
the bonds are put back to the Company, the remarketing agent or the
transfer agent will, at the direction of the Company, remarket such bonds.
Any bonds not remarketed will be retired utilizing the $29.9 million letter
of credit which represents the principal plus 60 days of interest at a
maximum rate of 12%. The
F-18
<PAGE> 137
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
letter of credit expires on November 27, 1996 and is subject to mandatory
redemption under certain circumstances. The estimated annual cost for the
letter of credit is approximately $1.1 million.
(b) On the Effective Date, the Company issued $100 million of 11 1/4% Senior
Unsecured Notes (the "11 1/4% Senior Notes") at a discount of 1.575% as
part of the investment by the partners of AmWest Partners LP ("AmWest") and
on October 14, 1994, the Company issued an additional $23 million of the
11 1/4% Senior Notes. In August 1995, the Company prepaid $48 million of
the $123 million 11 1/4% Senior Notes and exchanged the remaining $75
million of such notes for $75 million 10 3/4% Senior Unsecured Notes due
2005 ("10 3/4% Senior Notes"). The 10 3/4% Senior Notes mature on September
1, 2005 and interest is payable in arrears semi-annually commencing on
March 1, 1996. The 10 3/4% Senior Notes may be redeemed at the option of
the Company on or after September 1, 2001 at any time in whole or from time
to time in part, at a redemption price equal to the following percentage of
principal redeemed, plus accrued and unpaid interest to the date of
redemption, if redeemed during the 12-month period beginning:
<TABLE>
<CAPTION>
SEPTEMBER 1, PERCENTAGE
------------ ----------
<S> <C>
2000.............................................. 105.375%
2001.............................................. 103.583%
2002.............................................. 101.792%
2003 and thereafter............................... 100.000%
</TABLE>
Secured financings totaling $318.8 million are collateralized by assets,
primarily aircraft and engines, with a net book value of $424.9 million at
December 31, 1995.
At December 31, 1995, the estimated maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996........................................... $ 54,157
1997........................................... 46,176
1998........................................... 43,212
1999........................................... 45,401
2000........................................... 28,000
Thereafter..................................... 211,175
--------
$428,121
========
</TABLE>
Certain of the Company's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios, limitation on investments, a
$165.4 million limitation on restricted payments including cash dividends, and
other financial covenants with which the Company was in compliance at December
31, 1995.
3. CAPITAL STOCK
Preferred Stock
The Company's Board of Directors by resolution may authorize the issuance
of the Preferred Stock as a class, in one or more series, having the number of
shares, designations, relative voting rights, dividend rights, liquidation and
other preferences and limitations that the Board of Directors fixes without any
stockholder approval. No shares of Preferred Stock have been issued.
F-19
<PAGE> 138
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Common Stock
The holders of Class A Common Stock are entitled to fifty votes per share,
and the holders of Class B Common Stock are entitled to one vote per share, on
all matters submitted to a vote of common stockholders except that voting rights
of non-U.S. citizens are limited. The Class A Common Stock is convertible into
an equal number of Class B shares at any time at the election of the holders of
the Class A Common Stock.
Holders of Common Stock of all classes participate equally as to any
dividends or distributions on the Common Stock, except that dividends payable in
shares of Common Stock, or securities to acquire Common Stock, will be made in
the same class of Common Stock as that held by the recipient of the dividend.
Holders of Common Stock have no right to cumulate their votes in the election of
directors. The Common Stock votes together as a single class, subject to the
right to a separate class vote in certain instances required by law.
Pursuant to the Stockholder's Agreement, AmWest and GPA Group plc ("GPA")
will vote all shares of the Common Stock owned by them in favor of the
reelection of the initially designated Independent Directors for as long as such
Independent Directors continue to serve or until the first annual meeting after
August 25, 1997.
In addition to the voting and other provisions of the Stockholders'
Agreement, AmWest and GPA have agreed that (i) the partners and assignees of
AmWest will vote in favor of GPA's nominee to the Company's Board of Directors,
and (ii) GPA will vote in favor of the partners and assignees of AmWest's nine
nominees to the Company's Board of Directors for so long as (a) the partners and
assignees of AmWest own at least 5% of the voting equity securities of the
Company, and (b) GPA owns at least 2% of the voting equity securities of the
Company.
Warrants
The Company issued approximately 10.4 million Warrants to purchase Class B
Common Stock with an exercise price of $12.74 per share as part of the
reorganization. The Warrants are exercisable by the holders anytime before
August 25, 1999 and 10.4 million shares of Class B Common Stock have been
reserved for the exercise of these warrants. As of December 31, 1995, 4,329
warrants were exercised at $12.74 per share.
4. STOCK OPTIONS AND AWARDS
The Company has reserved 3.5 million shares of Class B Common Stock for
issuance as awards under its 1994 Incentive Equity Plan, of which no more than
1.5 million shares will be issued as Restricted Stock or Bonus Stock. Options to
purchase Class B Common Stock are granted at fair market value and generally
become exercisable over a three-year period, and ultimately lapse if unexercised
at the end of ten years.
On January 1, 1995 and on December 1, 1994, the Company granted 30,334
shares and 11,000 shares of Restricted Stock, respectively. Compensation expense
of $235,000 in 1995 and $97,000 in 1994 was recorded based upon the fair value
at the date of grant and applicable vesting provisions. At December 31, 1995,
41,334 shares of Restricted Stock were vested.
F-20
<PAGE> 139
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Option activity under the 1994 Incentive Equity Plan is as follows:
<TABLE>
<CAPTION>
EXERCISE PRICE
SHARES PER SHARE
--------- ---------------
<S> <C> <C>
1994:
Granted.................................................. 1,111,000 $8.75
---------
Outstanding at December 31, 1994......................... 1,111,000 $8.75
=========
1995:
Granted.................................................. 1,354,000 $7.75 - 18.00
Exercised................................................ (170,667) $8.75
Cancelled................................................ (214,000) $8.75 - 12.875
---------
Outstanding at December 31, 1995......................... 2,080,333 $7.75 - 18.00
=========
Exercisable at December 31, 1995......................... 556,001
=========
</TABLE>
The 1994 Incentive Equity Plan also provides for the issuance of Restricted
Stock and grant of stock options to non-employee directors. The Company has
granted options to purchase 78,000 shares of Class B Common Stock to members of
the Board of Directors who are not employees of the Company. The options have a
ten-year term and are exercisable six months after the date of grant. At
December 31, 1995, 78,000 options to purchase Class B Common Stock were
exercisable at prices ranging from $8.00 to $9.75 per share.
5. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) defined contribution plan, covering essentially
all employees of the Company. Participants may contribute from 1 to 15% of their
pre-tax earnings to a maximum of $9,240 in 1995. Currently, the Company matches
50% of a participant's contributions up to 6% of the participant's annual
pre-tax earnings. The Company's contribution expense to the plan totaled $5.9
million, $3.8 million and $2.1 million in 1995, 1994 and 1993, respectively.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short maturity
of these instruments.
Long-term Debt
At December 31, 1995 and 1994, the fair value of long-term debt was
approximately $431 million and $515 million, respectively, based on quoted
market prices for the same or similar debt including debt of comparable
remaining maturities.
F-21
<PAGE> 140
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES
The Company recorded income tax expense for the periods shown below
(exclusive of extraordinary items) as follows:
<TABLE>
<CAPTION>
REORGANIZED COMPANY PREDECESSOR COMPANY
-------------------------------- -----------------------------------
YEAR ENDED PERIOD FROM PERIOD FROM
DECEMBER 31, AUGUST 26 TO JANUARY 1 TO YEAR ENDED
1995 DECEMBER 31, 1994 AUGUST 25, 1994 DECEMBER 31, 1993
------------ ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Current Taxes:
Federal................. $ 505 $ -- $ 1,869 $ 675
State................... 190 36 190 84
-------- ------- -------- ---------
Total current
taxes.............. 695 36 2,059 759
-------- ------- -------- ---------
Deferred taxes............ -- -- -- --
-------- ------- -------- ---------
Income tax expense
attributable to
reorganization items and
other................... 52,913 11,854 -- --
-------- ------- -------- ---------
Total income tax
expense................. $ 53,608 $11,890 $ 2,059 $ 759
======== ======= ======== ========
</TABLE>
With respect to the year ended December 31, 1995 and the period August 26,
1994 to December 31, 1994, income tax expense pertains both to income before
extraordinary items as well as certain adjustments necessitated by the
effectiveness of the Plan and the resultant fresh start adjustments to the
Company's financial statements. The Company's reorganization and the associated
implementation of fresh start reporting gave rise to significant items of
expense for financial reporting purposes that are not deductible for income tax
purposes. In large measure, it is these nondeductible (for income tax purposes)
expenses that result in an effective tax rate (for financial reporting purposes)
significantly greater than the current U.S. corporate statutory rate of 35
percent. Nevertheless, the Company's actual cash income tax liability (i.e.,
income taxes payable) is considerably lower than income tax expense shown for
financial reporting purposes. This difference in financial expense compared to
actual income tax liability is in part attributable to the utilization of
certain tax attributes of the Predecessor Company that serve to reduce the
Company's actual income tax liability. The excess of financial expense over the
Company's actual income tax liability ($50 million) is applied to reduce the
carrying balance of the Company's reorganization value in excess of amounts
allocable to identifiable assets.
For the year ended December 31, 1995, the Company recognized an income tax
benefit of $984,000 arising from an extraordinary loss. For the periods January
1, 1994 to August 25, 1994, and the year ended December 31, 1993, income tax
expense pertains solely to income before extraordinary item. No income tax
expense was recognized with respect to the extraordinary gain resulting from the
cancellation of indebtedness that occurred in connection with the effectiveness
of the Plan as such gain is not subject to income taxation.
F-22
<PAGE> 141
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Income tax expense, exclusive of extraordinary items, recorded for the
periods shown below, differs from amounts computed at the federal statutory
income tax rate as follows:
<TABLE>
<CAPTION>
REORGANIZED COMPANY PREDECESSOR COMPANY
-------------------------------- ------------------------------
YEAR ENDED PERIOD FROM PERIOD FROM YEAR ENDED
DECEMBER 31, AUGUST 26 TO JANUARY 1 TO DECEMBER 31,
1995 DECEMBER 31, 1994 AUGUST 25, 1994 1993
------------ ----------------- --------------- ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Income tax expense at U.S.
statutory rate.............. $ 37,932 $ 6,908 $ 19,758 $ 13,273
State income taxes, net of
federal
income tax benefit.......... 4,505 1,663 190 84
Nondeductible amortization of
reorganization value in
excess of amounts allocable
to identifiable assets...... 11,188 3,901 -- --
Benefit of loss
carryforwards............... -- -- (17,889) (12,598)
Other, net.................... (17) (582) -- --
-------- ------- --------- --------
Total............... $ 53,608 $11,890 $ 2,059 $ 759
======== ======= ========= ========
</TABLE>
As of December 31, 1995, the Company has available net operating loss,
business tax credit and alternative minimum tax credit carryforwards for Federal
income tax purposes of approximately $533.6 million, $12.7 million and $1.1
million, respectively. The net operating loss carryforwards expire during the
years 1999 through 2009 while the business credit carryforwards expire during
the years 1997 through 2006. However, such carryforwards are not fully available
to offset federal (and in certain circumstances, state) alternative minimum
taxable income. Further, as a result of a statutory "ownership change" (as
defined for purposes of sec. 382 of the Internal Revenue Code) that occurred as
a result of the effectiveness of the Company's Plan of Reorganization, the
Company's ability to utilize its net operating loss and business tax credit
carryforwards may be restricted. The alternative minimum tax credit may be
carried forward without expiration and is available to offset future income tax
payable.
F-23
<PAGE> 142
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Composition of Deferred Tax Items:
For the year ended December 31, 1995 the Company recognized a deferred tax
asset of $74.7 million. The Company did not recognize any net deferred tax items
for the year ended December 31, 1994. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's deferred tax assets and
liabilities are a result of the temporary differences related to the items
described as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax liabilities:
Property and equipment, principally
depreciation and "fresh start" differences.................... $ (89,766) $ (71,425)
---------- ----------
Deferred tax assets:
Aircraft leases.................................................. 39,812 63,354
Reorganization expenses.......................................... 23,591 32,654
Net operating loss carryforwards................................. 203,879 215,119
Tax credit carryforwards......................................... 13,777 13,272
Other............................................................ 14,240 10,892
---------- ----------
Total deferred tax assets..................................... 295,299 335,291
---------- ----------
Valuation allowance.............................................. (130,833) (263,866)
---------- ----------
Net deferred asset............................................... $ 74,700 $ --
========== ==========
</TABLE>
SFAS 109 requires a "more likely than not" criterion be applied when
evaluating the realizability of a deferred tax asset. The Company's financial
performance has improved significantly and steadily over the past three years.
Taking into account certain adjustments necessitated by the Plan of
Reorganization, the Company's earnings for income tax purposes have shown a
commensurate improvement. After due consideration of, (i) this recent history of
earnings for income tax purposes; (ii) positive earnings trends for both
financial reporting and income tax purposes; (iii) prudent and feasible tax
planning strategies and (iv) the overall financial improvement of the airline
industry, the Company has reduced the valuation allowance by $133.0 million in
1995, principally for the portion of its net operating loss carryforwards (a
Predecessor Company tax attribute) that it anticipates will, more likely than
not, be utilized. This reduction in the valuation allowance and the resultant
recognition of a net deferred tax asset of a like amount serves to reduce the
carrying balance of reorganization value in excess of amounts allocable to
identifiable assets. The remaining valuation allowance of $130.8 million is
necessary as at this time, the Company has not determined it is more likely than
not that the balance of the deferred tax assets will be realized. The Company
continues to monitor the valuation allowance and will make adjustments as
appropriate. If in future tax periods, the Company were to recognize additional
tax benefits related to items attributable to the Predecessor Company such as
net operating loss and other carryforwards, such benefits would be applied to
further reduce reorganization value in excess of amounts allocable to
identifiable assets.
F-24
<PAGE> 143
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information and non-cash investing and
financing activities were as follows.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
REORGANIZED COMPANY ----------------------------
------------------------------
PERIOD FROM
PERIOD FROM JANUARY 1
YEAR ENDED AUGUST 26 TO TO YEAR ENDED
DECEMBER 31, DECEMBER 31, AUGUST 25, DECEMBER 31,
1995 1994 1994 1993
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Non-cash transactions
Notes payable.................. $ 5,723 $ -- $ -- $ 818
Accrued interest reclassified
to long-term debt........... 65 -- 5,563 15,137
Issuance of stock as success
bonus....................... -- -- 1,224 --
Equipment acquired through
capital leases.............. -- -- 138 709
Notes payable issued for
administrative claims....... -- -- -- 11,597
Conversion of long-term debt to
stock....................... -- -- -- 1,938
Cash transactions
Interest paid, net of amounts
capitalized................. 50,293 11,262 29,253 43,731
Income taxes paid.............. 795 425 1,253 537
</TABLE>
Cash flows from reorganization items in connection with the Chapter 11
proceedings were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1 TO YEAR ENDED
AUGUST 25, 1994 DECEMBER 31, 1993
--------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Interest received on cash accumulations.............. $ 3,711 $ 2,635
Professional fees paid for services rendered......... (23,563) (7,372)
D.I.P. financing issuance costs paid................. -- (1,378)
</TABLE>
9. INVESTMENT IN SECURITIES
Cash equivalents consist of highly liquid debt instruments with original
maturities of three months or less. The highly liquid debt instruments are
classified as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
(IN THOUSANDS)
Held to Maturity:
Debt securities issued by the U.S. Treasury and other U.S.
government agencies....................................... $129,288 $151,448
Bankers acceptances.......................................... 37,686 --
Corporate debt securities.................................... 20,466 11,975
Other debt securities........................................ 1,341 --
-------- --------
188,781 163,423
Cash........................................................... 35,586 19,158
-------- --------
Total.......................................................... $224,367 $182,581
======== ========
</TABLE>
F-25
<PAGE> 144
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. EXTRAORDINARY GAINS AND LOSSES
In August 1995, the Company had an extraordinary loss of $984,000, net of a
tax benefit of $984,000, or $.02 per common share for the write-off of debt
issuance cost, relating to the prepayment of $48 million of its $123 million
11 1/4% Senior Notes and the exchange of the remaining $75 million of such notes
for $75 million of 10 3/4% Senior Notes.
The extraordinary gain recorded in the period January 1 through August 25,
1994 includes $257.7 million from the discharge of indebtedness pursuant to the
consummation of the Plan of Reorganization. No income tax expense was recognized
with respect to the extraordinary gain resulting from the cancellation of
indebtedness that occurred in connection with the effectiveness of the Plan as
such gain is not subject to income taxation.
11. COMMITMENTS AND CONTINGENCIES
(a) Leases
As of December 31, 1995, the Company had 74 aircraft under operating leases
with remaining terms ranging from one month to approximately 22 years. The
Company has options to purchase certain of the aircraft at fair market values at
the end of the lease terms. Certain of the Company's aircraft lessors have the
option to call their respective aircraft. Usually, if such call options are
exercised, the Company has the right of first refusal to retain the aircraft.
None of these options have been exercised and the last of these call options
expires in July 1997. The Company does not believe that the possible exercise of
any or all of these options will have a material effect on its operations.
Certain of the agreements require security deposits, minimum return provisions,
maintenance reserve payments and provides the aircraft lessor the option to
reset their respective rentals to the greater of the existing rentals being paid
under the leases or the then current fair market rates. The Company also leases
certain terminal space, ground facilities and computer and other equipment under
noncancelable operating leases.
At December 31, 1995, the scheduled future minimum cash rental payments
under noncancelable operating leases with initial terms of more than one year
are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996................................................................... $ 226,694
1997................................................................... 199,183
1998................................................................... 165,447
1999................................................................... 159,344
2000................................................................... 149,473
Thereafter............................................................. 1,031,029
----------
$1,931,170
==========
</TABLE>
Rent expense (excluding landing fees) was approximately $251 million, $81
million, $154 million, and $245 million for the year ended December 31, 1995,
for the period August 26 through December 31, 1994, the period January 1 through
August 25, 1994 and the year ended December 31, 1993, respectively.
Collectively, the operating lease agreements require security deposits with
lessors of $14.2 million and bank letters of credit of $17.6 million. The
letters of credit are collateralized by $17.6 million of restricted cash as of
December 31, 1995 and 1994.
(b) Revenue Bonds
Special facility revenue bonds (the Series 1989 and 1990 Bonds) issued by a
municipality have been used to fund the acquisition of leasehold improvements at
the Phoenix Sky Harbor airport which have been leased
F-26
<PAGE> 145
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
by the Company. Under the operating lease agreements, which commenced in 1990,
the Company is required to make rental payments sufficient to pay principal and
interest when due on the bonds.
On August 25, 1994, the Company entered into a Restated and Amended Trust
Indenture in which the Series 1989 and Series 1990 Bonds were retired
contemporaneously with the issuance of the Series 1994A and Series 1994B Bonds.
Pursuant to the agreement, payment of principal and interest at 8.3% on the
Series 1994A Bonds commenced on October 1, 1994 and ends on January 1, 2006
while payment of principal and interest at 8.2% on the Series 1994B Bonds
commenced on October 1, 1994 and ends on January 1, 1999. At December 31, 1995,
the outstanding balance of Series 1994 Bonds was $18.7 million.
(c) Aircraft Acquisitions
At December 31, 1995, the Company was obligated to lease five aircraft
under a put agreement with GPA (the "GPA Put Agreement") with deliveries to
start no earlier than January 1, 1996 and end by June 30, 1999. Under the
agreement, new or used B737-300, B757-200, or new or "like new" A320-200
aircraft may be put to the Company at a rate of no more than two aircraft in
1996 and three aircraft per year thereafter. In addition, no more than four used
aircraft may be put to the Company, and for every new A320 aircraft put to the
Company, the Company has the right to reduce deliveries under the AVSA A320
purchase contract (discussed below) on a one-for-one basis. The Company is
currently negotiating with GPA for the lease of one new Airbus A320-200 for
delivery in May 1996. If those negotiations are successfully completed, the
Company will receive credit for one aircraft under the GPA Put Agreement (and
the number of aircraft that GPA will be entitled to put to the Company will be
reduced to four) and the Company will be entitled to reduce the deliveries (see
below) under the AVSA A320 purchase agreement by one additional aircraft.
The Company has commitments to AVSA S.A.R.L., an affiliate of Airbus
Industrie ("AVSA"), for a total of 24 Airbus A320-200 aircraft with delivery
dates that fall in the years 1999 through 2001. The aggregate net cost of such
aircraft is based on formulae that include certain price indices (including
indices for various aircraft components such as metal products) for periods
preceding the various delivery dates. Based on an assumed 5% annual price
escalation, the Company estimates such aggregate net cost to be approximately
$1.2 billion. The Company has the option to cancel without cause up to four of
these aircraft. In addition, if new A320 aircraft are delivered as a result of
the GPA Put Agreement, the Company has the right to cancel on a one-for-one
basis, up to a maximum of seven non-consecutive aircraft deliveries under the
AVSA agreement, subject to certain conditions. In April 1995, the Company took
delivery of two new A320 aircraft under the GPA Put Agreement. If the Company
were to exercise its existing rights to cancel six aircraft under the AVSA
agreement, the aggregate net cost (based upon the assumptions described above)
of commitments under such agreement would be reduced to approximately $900
million.
As part of the agreement, certain cash payments and securities were issued
to the put holder pursuant to the Plan (See Note 12).
In December 1994, the Company entered into a support contract with
International Aero Engines ("IAE") which provides for the purchase by the
Company of six new V2500-A5 spare engines scheduled for delivery beginning in
1998 through 2000 for use on the A320 fleet. Such engines have an estimated
aggregate cost of $42.2 million.
F-27
<PAGE> 146
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table reflects estimated cash payments under the aircraft and
engine purchase contracts. Actual payments may vary due to inflation factor
adjustments and changes in the delivery schedule of the equipment. The estimated
cash payments include the progress payments that will be made in cash, as
opposed to being financed under an existing progress payment financing facility.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996................................................................... $ 4,600
1997................................................................... 36,800
1998................................................................... 71,900
1999................................................................... 379,900
2000................................................................... 367,300
2001................................................................... 349,500
----------
$1,210,000
==========
</TABLE>
At December 31, 1995, the Company has significant capital commitments for a
number of aircraft, as discussed above. Although the Company has arranged for
financing for up to one-half of such commitment, the Company will require
substantial capital from external sources to meet the remaining financial
commitments. The Company intends to seek additional financing (which may include
public debt financing or private financing) in the future when and as
appropriate. There can be no assurance that sufficient financing will be
obtained for all aircraft and other capital requirements. A default by the
Company under any such commitment could have a material adverse effect on the
Company.
(d) Concentration Of Credit Risk
The Company does not believe it is subject to any significant concentration
of credit risk. Most of the Company's receivables result from tickets sold to
individual passengers through the use of major credit cards or to tickets sold
by other airlines and used by passengers on America West. These receivables are
short-term, generally being settled shortly after the sale.
(e) Contingent Legal Obligations
Certain administrative and priority tax claims are pending against the
Company which, if ultimately allowed by the Bankruptcy Court, would represent
general obligations of the Company. Such claims include claims of various state
and local tax authorities and certain contractual indemnification obligations.
The Company is also a defendant in various lawsuits. Management cannot
reasonably predict the outcome of the pending lawsuits and administrative and
priority tax claims. However, management believes, after considering a number of
factors, including the advice of outside counsel, the nature of the
contingencies to which the Company is subject and its prior experience, that
although the outcome of these matters could adversely affect future operating
results, the resolution of these actions will not have a material adverse effect
on the Company's financial condition.
12. RELATED PARTY TRANSACTIONS
In exchange for certain concessions principally arising from cancellation
of the right of GPA to lease to America West 10 Airbus A320 aircraft at
specified rates, GPA received (i) 900,000 shares of Class B Common Stock; (ii)
1,384,615 Warrants to purchase shares of Class B Common Stock at an exercise
price of $12.74 per share; (iii) a cash payment of approximately $30.5 million
and (iv) the rights to require the Company to lease up to eight aircraft of
types operated by the Company, which rights must be exercised by June 30, 1999.
F-28
<PAGE> 147
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company has entered into various aircraft acquisitions and leasing
arrangements with GPA at terms comparable to those obtained from third parties
for similar transactions. The Company currently leases 17 aircraft from GPA and
the rental payments for such leases amount to $65.7 million, $63.1 million, and
$63.1 million for the twelve months ended December 31, 1995, 1994 and 1993,
respectively. As of December 31, 1995, the Company was obligated to pay
approximately $1.0 billion under these leases which expire at various times
through the year 2013.
As part of the Reorganization, both Continental Airlines, Inc.
("Continental") and Mesa Air Group ("Mesa") made an investment in the Company,
and the Company entered into Alliance agreements with Continental and Mesa.
Pursuant to a code-sharing agreement with Mesa entered into in December 1992,
the Company collects a per-passenger charge for facilities, reservations and
other services from Mesa for enplanements in Phoenix on the Mesa system. Such
payments by Mesa to the Company totaled $2.9 million, $2.5 million and $1.9
million for the twelve months ended December 31, 1995, 1994 and 1993,
respectively. In addition the Company entered into several agreements in 1995
and 1994 with Continental related to code-sharing arrangements and ground
handling operations. The Company paid Continental approximately $14 million and
$2 million and also received approximately $11 million and $1 million in 1995
and 1994, respectively, from Continental for such services.
In October 1994, the Company issued an additional $23.0 million of 11 1/4%
Senior Notes to Fidelity Investments ("Fidelity") and Lehman Brothers Holding
Inc. ("Lehman") in exchange for full settlement of certain prepetition unsecured
claims. Additionally, cash payments of $2.1 million and $1.3 million were paid
to Fidelity and Lehman, respectively. In August 1995, the Company prepaid $48.0
million of its $123 million 11 1/4% Senior Unsecured Notes and exchanged the
remaining $75 million of the 11 1/4% Senior Unsecured Notes due 2001 for $75
million of 10 3/4% Senior Unsecured Notes due 2005.
13. RESTRUCTURING CHARGE
In December 1995, the Company recorded a $10.5 million restructuring charge
($.14 fully diluted earnings per share after taxes). The amount includes
severance costs of approximately $9.5 million for approximately 500 employees,
and $1.0 million for other costs related to the outsourcing of the heavy
aircraft maintenance work. At December 31, 1995, the outstanding balance was
$8.0 million. It is currently anticipated that the remaining balance will be
disbursed by the end of 1996.
14. CHAPTER 11 REORGANIZATION
The following occurred upon the Effective Date:
- The partners of AmWest Partners, L.P., a limited partnership which
includes TPG Partners, L.P. ("TPG"); Continental; and Mesa; together with
Lehman and Fidelity, as assignees of AmWest, invested $205.3 million in
consideration for the issuance of securities by the Reorganized Company,
consisting of (i) 1,200,000 shares of Class A Common Stock at a price of
$7.467 per share; (ii) 12,981,636 shares of Class B Common Stock,
consisting of 12,259,821 shares at a price of $7.467 per share and
721,815 shares at $8.889 per share (representing shares acquired as a
result of cash elections made by unsecured creditors); (iii) 2,769,231
Warrants to purchase shares of Class B Common Stock at an exercise price
of $12.74 per share and (iv) $100 million principal amount of 11 1/4%
Senior Unsecured Notes, due September 1, 2001.
- TPG and Fidelity, the holders of preferred equity interests of the
Predecessor Company received their pro rata share of (i) $500,000 in cash
and (ii) purchased 125,000 shares of Class B Common Stock (acquired
pursuant to certain subscription rights at a price of $8.889 per share).
- In exchange for certain concessions principally arising from cancellation
of the right of GPA and/or its affiliates to lease to America West 10
Airbus A320 aircraft, GPA received Class B Common Stock, a cash payment
and certain rights (See Note 12).
F-29
<PAGE> 148
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- Continental, Mesa and the Company entered into certain Alliance
Agreements relating to code-sharing, schedule coordination and certain
other relationships and agreements. With respect to Mesa, a pre-existing
code share agreement was extended to August 2004.
- The Company executed letter agreements with Fidelity and Lehman relating
to the settlement of certain prepetition claims. In October 1994,
Fidelity and Lehman received 11 1/4% Senior Notes and certain cash
payments. (See Note 12).
- The Plan also provided for many other matters, including the satisfaction
of certain other prepetition claims in accordance with negotiated
settlement agreements, the disposition of the various types of claims
asserted against the Company, the adherence to the Company's aircraft
lease agreements, the amendment of the Company's aircraft purchase
agreements and the release of the Company's employees from all
obligations arising under the Company's stock purchase plan in
consideration for the cancellation of the shares of Predecessor Company
stock securing such obligations.
In October 1995, the Company made an interim distribution based upon a
revised reserve estimate of $312 million which was authorized by the Bankruptcy
Court.
As of December 31, 1995, distributions on $305.6 million of allowed general
unsecured claims have been made. Approximately 25.5 million shares of the
Company's Class B Common Stock and cash proceeds equivalent to an additional
711,000 shares have been distributed in settlement. The remaining shares will be
distributed as the remaining general unsecured claims are allowed. To the extent
that the total allowed amount of claims is less than the $312 million reserve
set by the Bankruptcy Court, the holders of such claims will receive a
supplemental distribution.
Reorganization expense recorded by the Predecessor Company consisted of the
following:
<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED
JANUARY 1 TO DECEMBER 31,
AUGUST 25, 1994 1993
--------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Professional fees and other expenses directly related to
the Chapter 11 proceedings............................. $ 31,959 $ 9,419
Adjustments of assets and liabilities to fair value...... 166,829 --
Provisions for settlement of claims...................... 66,626 18,231
Reorganization success bonuses........................... 11,956 --
Interest income.......................................... (3,711) (2,635)
--------- --------
$ 273,659 $ 25,015
========= ========
</TABLE>
15. FRESH START REPORTING
In connection with its emergence from bankruptcy, the Company adopted fresh
start reporting in accordance with SOP 90-7. The fresh start reporting common
equity value of $587.5 million was determined by the Company with the assistance
of its financial advisors. The significant factors used in the determination of
this value were analyses of industry, economic and overall market conditions and
the historical and estimated performance of the Company as well as of the
airline industry, discussions with various potential investors and certain other
financial analyses.
Under fresh start reporting, the reorganization value of the entity has
been allocated to the Company's assets and liabilities on a basis substantially
consistent with purchase accounting. The portion of reorganization value not
attributable to specific tangible assets has been recorded as "Reorganization
Value in Excess of Amounts Allocable to Identifiable Assets" in the accompanying
balance sheet. The fresh start reporting adjustments, primarily related to the
adjustment of the Company's assets and liabilities to fair market values, will
have a significant effect on the Company's future statements of income. The more
significant of these adjustments relate to reduced depreciation
F-30
<PAGE> 149
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
expense on property and equipment, increased amortization expense relating to
reorganization value in excess of amounts allocable to identifiable assets and
increased interest expense.
The effects of the Plan and fresh start reporting on the balance sheet at
the Effective Date are as follows:
<TABLE>
<CAPTION>
PREDECESSOR (B) REORGANIZED
COMPANY (A) ISSUE OF (C) COMPANY
------------- DEBT DEBT & FRESH START -------------
AUG. 25, 1994 DISCHARGE STOCK ADJUSTMENTS AUG. 25, 1994
------------- --------- -------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............... $ 156,401 $(140,284) $205,956 $ -- $ 222,073
Accounts receivable, net................ 77,682 -- 6,831 -- 84,513
Expendable spare parts and supplies..... 27,715 -- -- (2,371) 25,344
Prepaid expenses........................ 34,540 -- -- (885) 33,655
----------- --------- -------- --------- -----------
Total current assets...................... 296,338 (140,284) 212,787 (3,256) 365,585
Property and equipment, net............... 702,442 -- -- (138,830) 563,612
Restricted cash........................... 30,503 -- -- -- 30,503
Reorganization value in excess of amounts
allocable to identifiable assets........ -- -- -- 668,702 668,702
Other assets, net......................... 24,497 -- 1,575 (2,449) 23,623
----------- --------- -------- --------- -----------
Total assets.............................. $ 1,053,780 $(140,284) $214,362 $ 524,167 $ 1,652,025
=========== ========= ======== ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
Current liabilities:
Current maturities of long-term debt.... $ 119,185 $ (65,014) $ -- $ -- $ 54,171
Accounts payable........................ 98,080 6,500 -- 969 105,549
Air traffic liability................... 153,808 -- -- -- 153,808
Accrued compensation and vacation
benefits.............................. 27,443 -- -- -- 27,443
Accrued interest........................ 5,620 -- -- -- 5,620
Accrued taxes........................... 26,613 14,405 -- -- 41,018
Other accrued liabilities............... 29,161 -- -- -- 29,161
----------- --------- -------- --------- -----------
Total current liabilities................. 459,910 (44,109) -- 969 416,770
Estimated liabilities subject to Chapter
11 proceedings.......................... 382,769 (382,769) -- -- --
Long-term debt, less current maturities... 368,939 28,934 100,000 -- 497,873
Manufacturers' and deferred credits....... 70,625 -- -- 51,530 122,155
Other liabilities......................... 57,932 -- -- (30,205) 27,727
Stockholders' equity (deficiency)
Preferred stock......................... 18 -- -- (18) --
Common stock, Predecessor Company....... 6,432 -- -- (6,432) --
Common stock, Reorganized Company....... -- -- 152 299 451
Additional paid in capital.............. 200,058 -- 114,710 272,281 587,049
Accumulated deficit..................... (474,565) 257,660 (500) 217,405 --
----------- --------- -------- --------- -----------
(268,057) 257,660 114,362 483,535 587,500
Deferred compensation and notes
receivable -- employee stock purchase
plans................................. 18,338 -- -- (18,338) --
----------- --------- -------- --------- -----------
Total stockholders' equity (deficiency)... (286,395) 257,660 114,362 501,873 587,500
----------- --------- -------- --------- -----------
Total liabilities & stockholders' equity
(deficiency)............................ $ 1,053,780 $(140,284) $214,362 $ 524,167 $ 1,652,025
=========== ========= ======== ========= ===========
</TABLE>
- ---------------
(a) To record the discharge or reclassification of prepetition obligations
pursuant to the Plan of Reorganization, as well as the repayment in cash of
$77.6 million of D.I.P. financing and a $62.7 million priority term loan.
F-31
<PAGE> 150
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(b) To record proceeds received from the issuance of new debt and equity
securities and to record the preferred stock settlement payment of $500,000
and the receipt of approximately $1.1 million for the purchase of Class B
Common Stock.
(c) To record adjustments to reflect assets and liabilities at fair market
values and to record reorganization value in excess of amounts allocable to
identifiable assets.
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for 1995 and 1994 are as follows (in
thousands of dollars except per share amounts):
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
1995 -- REORGANIZED COMPANY QUARTER QUARTER QUARTER QUARTER
---------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Total operating revenues................ $345,790 $399,916 $408,627 $396,309
Operating income(a)..................... 24,895 52,957 54,160 22,720
Nonoperating expense, net............... (13,927) (11,760) (11,047) (9,620)
Income tax expense...................... (5,758) (20,324) (20,414) (7,112)
Net income(a)........................... 5,210 20,873 21,715 5,988
Earnings per share:
Primary............................... .12 .46 .46 .13
Fully diluted......................... .12 .45 .45 .12
</TABLE>
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
1994 -- REORGANIZED COMPANY QUARTER QUARTER QUARTER QUARTER
---------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Total operating revenues................ $ $ $127,315 $342,451
Operating income........................ 8,336 30,535
Nonoperating expense, net............... (5,293) (13,842)
Income tax expense...................... (1,825) (10,065)
Net income.............................. 1,218 6,628
Earnings per share:
Primary............................... .03 .15
Fully diluted......................... .03 .15
</TABLE>
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
1994 -- PREDECESSOR COMPANY QUARTER QUARTER QUARTER QUARTER
---------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Total operating revenues................ $345,264 $363,351 $230,413 $
Operating income........................ 37,750 44,146 25,610
Nonoperating expense, net(b)............ (21,943) (23,171) (263,601)
Income tax expense...................... (632) (839) (588)
Net income(b)........................... 15,175 20,136 19,081
Earnings per share:
Primary............................... .56 .74 .69
Fully diluted......................... .40 .52 .49
</TABLE>
- ---------------
(a) During the fourth quarter of 1995, the Company recorded restructuring
charges of $10.5 million. See note 13 for more information.
(b) During the third quarter of 1994, the Company recorded reorganization
expenses of $255.4 million as well as an extraordinary gain of $257.7
million from the discharge of debt pursuant to the Plan of Reorganization.
F-32
<PAGE> 151
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
17. SUBSEQUENT EVENT
In February 1996, certain stockholders of the Company who hold shares of
Class B Common Stock registered under the Company's shelf registration statement
sold 7.2 million of such shares pursuant to an underwritten public offering. The
selling stockholders were affiliates of Texas Pacific Group, Mesa, Continental
and Lehman. The shares offered were purchased by the selling stockholders in
connection with America West's emergence from bankruptcy in August 1994.
F-33
<PAGE> 152
APPENDIX I -- INDEX OF CERTAIN DEFINED TERMS
The following is an index showing the page in this Prospectus where certain
terms are defined.
<TABLE>
<CAPTION>
DEFINED TERM PAGE
- ------------------------------------- -----
<S> <C>
10 3/4% Notes........................ 67
11 1/4% Notes........................ 67
Adjusted Expected Distributions...... 19
Administration Expenses.............. 86
ADs.................................. 57
Aggregate LTV Collateral Amount...... 20
Aircraft............................. 2
Airframe............................. 107
Air Partners II...................... 26
AISI................................. 8
ALPA................................. 26
America West......................... Cover
AmWest............................... 27
Appraisals........................... 29
Appraised Current Market Value....... 20
Appraisers........................... 8
ASM.................................. 6
Assumed Aggregate Equipment Value.... 9
Assumed Equipment Value.............. 94
Average Life Date.................... 93
Aviation Safety Commission........... 57
AVSA................................. 41
AVSA Term Sheet...................... 48
AWArd Pay............................ 53
Bankruptcy Code...................... 15
Base Rate............................ 83
Basic Agreement...................... Cover
Basic Rent........................... 107
Basic Term........................... 107
BK................................... 8
Cash Collateral Account.............. 18
Cede................................. 78
Certain Taxes and Fees............... 87
Certificate Account.................. 71
Certificate Owner.................... 78
Certificated Air Carrier............. 107
Certificateholders................... 13
Certificates......................... Cover
Citicorp............................. 116
Class A Certificates................. Cover
Class A Common Stock................. 26
Class A Trust........................ Cover
Class B Certificates................. Cover
Class B Common Stock................. 26
Class B Trust........................ Cover
Class C Certificates................. Cover
Class C Trust........................ Cover
Class D Certificates................. Cover
Class D Trust........................ Cover
Class E Certificates................. Cover
Class E Trust........................ Cover
Class Exemptions..................... 113
<CAPTION>
DEFINED TERM PAGE
- ------------------------------------- -----
<S> <C>
Closing Date......................... 2
Code................................. 22
Commission........................... 3
Common Stock......................... 26
Company.............................. Cover
Continental.......................... 6
Controlling Party.................... 21
Convention........................... 94
Cross-Border Lease................... 108
Cross-Border Lessee.................. 108
Cross-Border Lessor.................. 108
CRS.................................. 42
Current Distribution Date............ 19
Definitive Certificates.............. 80
Distribution Date.................... 13
DOT.................................. 28
Downgrade Drawing.................... 18
DTC.................................. 78
DTC Participants..................... 79
Effective Date....................... 27
Engine............................... 107
Equipment............................ 2
Equipment Notes...................... 2
Equipment Trust Certificate.......... 34
Exculpated Person.................... 101
ERISA................................ 22
ERISA Plans.......................... 113
Event of Loss........................ 105
Exchange Act......................... 3
Expected Distributions............... 19
FAA.................................. 28
Federal Aviation Act................. 76
Fidelity............................. 67
Final Distributions.................. 21
Final Drawing........................ 83
Final Expected Distribution Date..... 12
Final Legal Distribution Date........ 13
Financial institution................ 111
Global Certificates.................. 78
GPA.................................. 27
GPA Put Agreement.................... 48
GPA Put Termination Agreement........ 48
IBT.................................. 26
Indenture............................ 12
Indenture Event of Default........... 74
Indenture Trustee.................... 12
Indirect Participants................ 79
Intercreditor Agreement.............. 18
Interest Drawings.................... 16
Interest Period...................... 83
IRS.................................. 110
Lease................................ 2
</TABLE>
I-1
<PAGE> 153
<TABLE>
<CAPTION>
DEFINED TERM PAGE
- ------------------------------------- -----
<S> <C>
Lease Default........................ 107
Lease Event of Default............... 74
Lease Payment Dates.................. 107
Lehman............................... 67
LIBOR................................ 83
Liquidity Event of Default........... 83
Liquidity Expenses................... 86
Liquidity Facility................... 16
Liquidity Obligations................ 17
Liquidity Provider................... Cover
Long Settlement...................... 2
LTV Appraisal........................ 20
LTV Collateral Amount................ 20
LTV Ratio............................ 8
Make-Whole Amount.................... 92
MBA.................................. 8
Mesa................................. 6
Minimum Sale Price................... 22
Moody's.............................. 17
Morgan Stanley....................... 116
NMB.................................. 26
NOL.................................. 47
Non-Performing Equipment Notes....... 17
Non-U.S. Certificateholder........... 111
Notes Amount......................... 29
Order................................ 59
Original Lessee...................... 34
Owner Participant.................... 15
Owner Trust.......................... 2
Owner Trust Agreement................ 90
Owner Trustee........................ 2
Pass Through Trust Agreements........ Cover
Performing Equipment Notes........... 17
Performing Note Deficiency........... 17
Permitted Sublessee.................. 107
PFCs................................. 56
Plan Asset Regulation................ 113
Plans................................ 22
Pool Balance......................... 72
Pool Factor.......................... 72
Prior Subleases...................... 67
PTC Event of Default................. 13
PTCE................................. 22
RASM................................. 41
Rating Agencies...................... 17
Record Date.......................... 13
Refunding Agreement.................. 12
Registration Statement............... 3
Regular Distribution Dates........... 13
Remaining Weighted Average Life...... 93
Renewal Rent......................... 107
DEFINED TERM PAGE
- ------------------------------------- -----
Renewal Term......................... 107
Reorganization....................... 25
Reorganization Plan.................. 58
Replacement Facility................. 82
Required Amount...................... 16
Review Commission.................... 57
Rules................................ 79
Scheduled Payments................... 70
Section 1110 Period.................. 17
Section 382 Limitation............... 48
Securities Act....................... 3
Series A Equipment Notes............. 2
Series B Equipment Notes............. 2
Series C Equipment Notes............. 2
Series D Equipment Notes............. 2
Series E Equipment Notes............. 2
Shortfall Amounts.................... 111
SOP 90-7............................. 39
Spare Engines........................ 2
Special Distribution Date............ 71
Special Payment...................... 71
Special Payments Account............. 71
Standard & Poor's.................... 17
Stated Interest Rates................ 16
Stockholder's Agreement.............. 27
Subordinated Certificateholders...... 111
Subordinated Certificates............ 111
Subordinated Trusts.................. 111
Subordination Agent.................. 12
Supplemental Rent.................... 107
Term................................. 107
Threshold Rating..................... 23
TPG.................................. 26
TPG Parallel......................... 26
Treasury Yield....................... 92
Triggering Event..................... 14
Trust Company........................ 93
Trust Indenture Estate............... 91
Trust Property....................... 12
Trust Supplement..................... Cover
Trustee.............................. Cover
Trusts............................... Cover
TWU.................................. 54
U.S. Certificateholders.............. 110
U.S. Persons......................... 110
Underwriting Agreement............... 115
Underwriters......................... 115
Underwriters Exemption............... 114
Warrants............................. 26
</TABLE>
I-2
<PAGE> 154
APPENDIX II -- AIRCRAFT APPRAISALS
[AIRCRAFT INFORMATION SERVICES, INC. LETTERHEAD]
11 July 1996
Mr. Eugene Peppard
GPA Group plc
GPA House
Shannon Co. Clare
IRELAND
Subject: AISI Report No. A6S022BVO
AISI Short Form Sight Unseen Appraisal
Twelve A320-200 aircraft and 3 Spare V2500-A1 Engines
Reference: GPA Group plc Fax Message dated 27 June 1996
Dear Mr. Peppard:
As requested, Aircraft Information Services, Inc. (AISI) is pleased to
offer GPA Group plc our opinion of the sight unseen half-life base value twelve
A320-200 aircraft plus three spare V2500-A1 engines as identified in Table I of
this report.
1. METHODOLOGY AND DEFINITIONS
The historical standard term of reference for commercial aircraft value has
been "half-life fair market value" of an "average" aircraft. However, "fair
market value" could mean a fair value in the given market or a value in a
hypothetical "fair" or balanced market, and the two definitions are not
equivalent. Recently, the term "base value" has been created to describe the
theoretical balanced market condition and to avoid the potentially misleading
term "fair market value" which has now become synonymous with the term "current
market value" or a "fair" value in the actual current market. AISI value
definitions are consistent with those of the International Society of Transport
Aircraft Trading (ISTAT) of 01 January 1994; AISI is a member of that
organization and employs an ISTAT Certified Senior Aircraft Appraiser.
AISI defines a "base value" as that of a transaction between equally
willing and informed buyer and seller, neither under compulsion to buy or sell,
for a single unit cash transaction with no hidden value or liability, and with
supply and demand of the sale item roughly in balance. Base values are typically
given for aircraft in "new" condition, "average half-life" condition, or in a
specifically described condition unique to a single aircraft at a specific time.
An "average" aircraft is an operable airworthy aircraft in average physical
condition and with average accumulated flight hours and cycles, with clear title
and standard unrestricted certificate of airworthiness, and registered in an
authority which does not represent a penalty to aircraft value or liquidity,
with no damage history and with inventory configuration and level of
modification which is normal for its intended use and age. "Half-life" condition
assumes that every component or maintenance service which has a prescribed
interval that determines its service life, overhaul interval or interval between
maintenance services, is at a condition which is one-half of the total interval.
Headquarters, 23232 Peralta Drive, Suite 115, Laguna Hills, CA 92653
TEL: 714-830-0101 FAX: 714-830-1101
II-1
<PAGE> 155
AISI defines a "current market value" as that value which reflects the real
market conditions, whether at, above or below the base value conditions.
Definitions of aircraft condition, buyer/seller qualifications and type of
transaction remain unchanged from that of base value. Current market value takes
into consideration the status of the economy in which the aircraft is used, the
status of supply and demand for the particular aircraft type, the value of
recent transactions and the opinions of informed buyers and sellers. Current
market value assumes that there is no short term time constraint to buy or sell.
AISI encourages the use of base values only to consider historical trends,
as a basis for long term future value considerations, or to consider how actual
market values vary from theoretical base values. Base values are inappropriate
to determine near term values. AISI encourages the use of current marker values
to consider the probable near term value of an aircraft.
2. VALUATION
The half-life base valuations are presented below subject to the
assumptions, definitions and disclaimers herein.
TABLE I
<TABLE>
<CAPTION>
HALF-LIFE
BASE VALUE
DATE OF MTOW 1996
AIRCRAFT/EQUIPMENT TYPE S/N MANUFACTURE (LBS.) ENGINES U.S. DOLLARS
- ----------------------- --- ----------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
A320-200........................... 55 Jun 89 162,000 V2500-A1 $29,290,000
A320-200........................... 65 Jul 89 162,000 V2500-A1 $29,400,000
A320-200........................... 66 Jul 89 162,000 V2500-A1 $29,400,000
A320-200........................... 67 Jul 89 162,000 V2500-A1 $29,400,000
A320-200........................... 76 Sep 89 162,000 V2500-A1 $29,620,000
A320-200........................... 77 Sep 89 162,000 V2500-A1 $29,620,000
A320-200........................... 81 Sep 89 162,000 V2500-A1 $29,620,000
A320-200........................... 82 Oct 89 162,000 V2500-A1 $29,730,000
A320-200........................... 91 Nov 89 162,000 V2500-A1 $29,830,000
A320-200........................... 92 Nov 89 162,000 V2500-A1 $29,830,000
A320-200........................... 98 Feb 90 162,000 V2500-A1 $30,160,000
A320-200........................... 99 Dec 89 162,000 V2500-A1 $29,940,000
V2500-A1........................... 19 -- -- -- $ 3,500,000
V2500-A1........................... 25 -- -- -- $ 3,500,000
V2500-A1........................... 49 -- -- -- $ 3,500,000
</TABLE>
This report is offered as a fair and impartial assessment of subject
aircraft based on data supplied by others, with no physical inspection or
verification by AISI. AISI has no past, present nor contemplated future interest
in subject aircraft. This report is an opinion and is for the sole use of the
client/addressee and AISI shall not be liable to any party for damages arising
out of reliance or alleged reliance on it, or for any parties action or failure
to act as a result of reliance or alleged reliance on this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ FRED E. BEARDEN
--------------------------------------
Fred E. Bearden
President
II-2
<PAGE> 156
[BK ASSOCIATES, INC. LETTERHEAD]
July 2, 1996
Mr. Declan Treacy
GPA Group plc
GPA House
Shannon, Co. Clare
Ireland
Dear Declan:
In response to your recent request, BK Associates, Inc. is pleased to
provide an opinion on the current base value (BV) of 16 Airbus A320-231
aircraft, each powered by International Aero Engines V2500-A1 engines (Aircraft)
and three V2500-A1 spare engines (Engines). The Aircraft which are on lease to
America West Airlines are further identified below.
Based on our knowledge of the A320-200 aircraft, its capabilities and uses
to which it is put worldwide; the current supply and demand for A320s and
competitive types; the operation of the appraised Aircraft and our knowledge of
the used commercial aircraft market; it is our opinion that the current base
value of each of the Aircraft and Engines is as shown below.
<TABLE>
<CAPTION>
CURRENT
SERIAL DATE BASE
REGISTRATION NUMBER DELIVERED VALUE
------------ ------ --------- ------------------
<S> <C> <C> <C>
N620AW........................ 52 07/89 $29,500,000
N621AW........................ 53 09/89 29,900,000
N622AW........................ 54 09/89 29,000,000
N624AW........................ 55 09/89 29,000,000
N625AW........................ 64 09/89 29,000,000
N626AW........................ 65 09/89 29,900,000
N627AW........................ 66 11/89 30,150,000
N628AW........................ 67 11/89 30,150,000
N629AW........................ 76 11/89 30,150,000
N631AW........................ 77 12/89 30,300,000
N632AW........................ 81 12/89 30,300,000
N633AW........................ 82 12/89 30,300,000
N634AW........................ 91 02/90 30,500,000
N635AW........................ 92 02/90 30,500,000
N636AW........................ 98 04/90 30,700,000
N637AW........................ 99 04/90 30,700,000
Engine........................ 19 5,250,000
Engine........................ 25 5,250,000
Engine........................ 49 5,250,000
</TABLE>
According to the International Society of Transport Aircraft Trading's
(ISTAT) definition of base value, to which BK Associates subscribes, base value
is the Appraiser's opinion of the underlying economic value of an aircraft in an
open, unrestricted, stable market environment with a reasonable balance of
supply and demand, and assumes full consideration of its "highest and best use".
An aircraft's Base Value is founded in the historical trend of values and in the
projection of value trends and presumes an arm's length, cash transaction
between willing, able and knowledgeable parties, acting prudently, with an
absence of duress and with a reasonable period of time available marketing.
II-3
<PAGE> 157
Ultimately aircraft values depend almost entirely on supply and demand. A
shortage of aircraft or an unexpected increase in demand for air transportation
tends to increase values of aircraft. If the market is balanced between supply
and demand, the long term trend of the base value is determined from historical
and projected value trends, adjusted to account for factors that influence the
base value. These factors include:
- Suitability of available aircraft to the operator's requirements.
- Operating cost and purchase price.
- Regulatory factors.
- Remaining useful life.
For a new or relatively new aircraft in a balanced market, the factor that
affects base value most is the new aircraft price and the methodology relates
the current value and forecast future values to the new price or replacement
cost, adjusted to account for the estimated time cycles used to date on the
aircraft. Considering the new price for these aircraft was about $36 million
each, allowing for the average utilization to date and allowing for inflation
suggests the current base values above.
It is emphasized that BK Associates has neither inspected the Aircraft or
Engines nor their maintenance records, but has relied upon the information you
have provided in your request and our own database. The assumptions have been
made that all Airworthiness Directives have been complied with; accident damage
has not been incurred that would affect market values; and maintenance has been
accomplished in accordance with a civil airworthiness authority's approved
maintenance program and accepted industry standards. Further, it is assumed the
Aircraft and Engines are at half-time between high cost maintenance events.
Deviations from these assumptions can change significantly our opinion regarding
the Aircrafts' values.
BK Associates, Inc. has no present or contemplated future interest in the
Aircraft, nor any interest that would preclude our making a fair and unbiased
estimate. This appraisal represents the opinion of BK Associates, Inc. and
reflects our best judgment based on the information available to us at the time
of preparation and the time and budget constraints imposed by the client. It is
not given as a recommendation, or as an inducement, for any financial
transaction and further, BK Associates, Inc. assumes no responsibility or legal
liability for any action taken or not taken by the addressee, or any other
party, with regard to the appraised equipment. By accepting this appraisal, the
addressee agrees that BK Associates, Inc. shall bear no such responsibility or
legal liability. This appraisal is prepared for the use of the addressee and
shall not be provided to other parties without the express consent of the
addressee.
Sincerely yours,
BK ASSOCIATES, INC.
/s/ JOHN F. KEITZ
--------------------------------------
John F. Keitz
Vice President
ISTAT Certified Senior Appraiser
II-4
<PAGE> 158
[MORTEN BEYER AND ASSOCIATES LETTERHEAD]
July 12, 1996
Mr. Declan Treacy
GPA Group plc
GPA House
Shannon, County Clare
Ireland
Dear Mr. Treacy:
GPA Group plc (GPA) has requested Morten Beyer and Associates (MBA) to
render its expert opinion as to the Base Value of twelve Airbus A320-230
aircraft equipped with V-2500-A1 engines, operated by America West Airlines,
together with three spare V-2500-A1 engines. GPA has requested that all aircraft
and engines be assumed to be in half-time condition as that term is generally
understood in the industry. In addition, we have made the following generic
assumptions that underlie a Base Value determination.
1. The aircraft is in good overall condition
2. The overhaul status of the airframe, engines, landing gear, and other major
components are the equivalent of mid-time/mid-life
3. The historical maintenance documentation has been maintained to acceptable
international standards
4. The specifications of the aircraft are those most common for an aircraft of
its type and vintage
5. The aircraft is in a standard airline configuration
6. The aircraft is current as to all Airworthiness Directives and Service
Bulletins
7. The modifications status is comparable to that most common for an aircraft
of its type and vintage
8. Utilization has been comparable to industry averages
9. There is no history of accident or incident damage
10. The aircraft is not encumbered by any attached lease, tax benefit
recapture, or other extraneous factor
The twelve A320-230 aircraft were delivered between June, 1989 and
February, 1990, and their values have been adjusted to reflect this fact. It is
assumed that the spare engines were delivered at the mid-point in the aircraft
delivery cycle, or October, 1989. Engines are assumed to be equipped with
neutral QEC's.
MBA has not inspected the aircraft or engines or their records, but rather
has made the assumptions outlined above with respect to their configuration and
condition.
The current market for the Airbus A320 is strong. Only one aircraft is
known to be on the market for sale. As of June 30, 1996, 535 had been delivered,
and 213 were on backlog, with an additional 140 options. At current delivery
rates the backlog will take four to five years to work off.
The A320 has won worldwide acceptance due to its advanced engineering,
passenger comfort, and fuel efficiency. The A320's principal rivals, the B-737
and MD-80, are built on platforms that are more than 30 years old, while the
A320 technology is 20 years younger. The cabin is six inches wider than the
B-737, permitting roomier seats and a wider aisle. Fuel consumption per seat is
approximately 9.5 percent less than a B-737-300 and 17.5 percent less than an
MD-80.
The aircraft, with its V-2500 engines, is measurably quieter than either
the B-737-300 or MD-80, and thus has a lower noise footprint and is less likely
to be impacted by future tightening of noise restrictions.
II-5
<PAGE> 159
APPRAISED VALUE
The table following sets forth the Base Value as of July 1, 1996 of the
twelve aircraft in half-time condition and other assumed factors:
<TABLE>
<CAPTION>
REGISTRATION BUILD DATE BASE VALUE
------------ ---------- -----------
<S> <C> <C>
N624AW................................... Jun-89 $30,335,000
N626AW................................... Jul-89 30,412,500
N627AW................................... Jul-89 30,412,500
N628AW................................... Jul-89 30,412,500
N629AW................................... Sep-89 30,567,500
N631AW................................... Sep-89 30,567,500
N632AW................................... Sep-89 30,567,500
N633AW................................... Oct-89 30,645,000
N634AW................................... Nov-89 30,722,500
N635AW................................... Nov-89 30,722,500
N636AW................................... Feb-90 30,955,000
N637AW................................... Dec-89 30,800,000
------------
$367,120,000
============
</TABLE>
The appraised value of the V-2500-A1 engines in half-time serviceable
condition is $3,100,000 each, or a total of $9,300,000 for the three. It is
assumed that the spare engines have a neutral QEC installed.
It is noted that MBA appraises the Current Fair Market Value of these
aircraft at ten percent higher than Base Value due to the current shortage of
aircraft on the market, the long delivery queue for new orders, and their
superior economics.
COVENANTS
This report has been prepared for the exclusive use of GPA and shall not be
provided to other parties by MBA without the express consent of GPA.
MBA certifies that this report has been independently prepared and that it
fully and accurately represents MBA's opinion of the Current Market Value, as of
the date of this report, of the subject aircraft. MBA further certifies that it
does not have, and does not expect to have, any financial or other interest in
the subject aircraft.
This report represents the opinion of MBA and is intended to be advisory
only in nature. Therefore, MBA assumes no responsibility or legal liability for
any actions taken or not taken by GPA or any other party with regard to the
subject aircraft. By accepting this report, all parties agree that MBA shall
bear no such responsibility or legal liability.
Sincerely,
/s/ MORTEN S. BEYER
--------------------------------------
Morten S. Beyer
President
ISTAT Certified Senior Appraiser
II-6
<PAGE> 160
APPENDIX III -- EQUIPMENT NOTES PRINCIPAL PAYMENT SCHEDULE*
SERIES A
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR ------------------------------------------------------------------------------------------------
DISTRIBUTION DATES 55 65 77 82 091 092 098
- ------------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 2, 1997.......... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
July 2, 1997............. 238,733.36 238,733.34 238,733.34 241,799.99 242,806.67 242,806.67 242,806.67
January 2, 1998.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 1998............. 238,733.34 238,733.33 238,733.33 241,800.01 242,806.66 242,806.66 242,806.66
January 2, 1999.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 1999............. 238,733.35 238,733.33 238,733.33 241,800.00 242,806.65 242,806.65 242,806.65
January 2, 2000.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2000............. 238,733.31 238,733.33 238,733.33 241,800.00 242,806.66 242,806.66 242,806.66
January 2, 2001.......... 0.00 0.00 0.00 476,191.28 0.00 0.00 0.00
July 2, 2001............. 238,733.34 238,733.33 238,733.33 0.00 242,806.66 242,806.66 242,806.66
January 2, 2002.......... 115,769.84 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2002............. 1,351,043.37 238,733.33 238,733.33 7,408.70 485,613.33 485,613.33 485,613.33
January 2, 2003.......... 1,400,491.56 516,469.64 516,469.64 0.00 0.00 0.00 0.00
July 2, 2003............. 1,451,749.55 1,374,446.62 1,374,446.62 241,800.00 0.00 0.00 0.00
January 2, 2004.......... 1,504,883.59 1,424,751.37 1,424,751.37 0.00 0.00 0.00 0.00
July 2, 2004............. 1,559,962.33 1,476,897.27 1,476,897.27 241,800.00 242,806.64 242,806.64 242,806.64
January 2, 2005.......... 1,617,056.95 1,530,951.71 1,530,951.71 0.00 0.00 0.00 0.00
July 2, 2005............. 1,676,241.23 1,586,984.54 1,586,984.54 483,600.00 242,806.66 242,806.66 242,806.66
January 2, 2006.......... 65,801.63 1,645,068.17 1,645,068.17 176,558.59 794,168.00 794,168.00 794,168.00
July 2, 2006............. 0.00 948,697.50 948,697.50 1,443,835.99 1,688,840.24 1,688,840.24 1,688,840.24
January 2, 2007.......... 0.00 0.00 0.00 1,496,680.38 1,750,651.79 1,750,651.79 1,750,651.79
July 2, 2007............. 0.00 0.00 0.00 1,551,458.88 1,814,725.65 1,814,725.65 1,814,725.65
January 2, 2008.......... 0.00 0.00 0.00 1,608,242.28 1,881,144.61 1,881,144.61 1,881,144.61
July 2, 2008............. 0.00 0.00 0.00 1,667,103.94 1,949,994.50 1,949,994.50 1,949,994.50
January 2, 2009.......... 0.00 0.00 0.00 1,728,119.92 75,548.42 75,548.42 75,548.42
July 2, 2009............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2010.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
REGULAR
DISTRIBUTION DATES 099 V0019 V0025 V0049
- ------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
January 2, 1997.......... $ 0.00 $ 0.00 $ 0.00 $ 0.00
July 2, 1997............. 242,806.67 115,906.22 115,906.22 115,906.22
January 2, 1998.......... 0.00 0.00 0.00 0.00
July 2, 1998............. 242,806.66 0.00 0.00 0.00
January 2, 1999.......... 0.00 0.00 0.00 0.00
July 2, 1999............. 242,806.65 0.00 0.00 0.00
January 2, 2000.......... 0.00 0.00 0.00 0.00
July 2, 2000............. 242,806.66 0.00 0.00 0.00
January 2, 2001.......... 0.00 24,093.78 24,093.78 24,093.78
July 2, 2001............. 242,806.66 0.00 0.00 0.00
January 2, 2002.......... 0.00 56,000.00 56,000.00 56,000.00
July 2, 2002............. 485,613.33 0.00 0.00 0.00
January 2, 2003.......... 0.00 0.00 0.00 0.00
July 2, 2003............. 0.00 0.00 0.00 0.00
January 2, 2004.......... 0.00 189,767.68 189,767.68 189,767.68
July 2, 2004............. 242,806.64 0.00 0.00 0.00
January 2, 2005.......... 0.00 0.00 0.00 0.00
July 2, 2005............. 242,806.66 0.00 0.00 0.00
January 2, 2006.......... 794,168.00 0.00 0.00 0.00
July 2, 2006............. 1,688,840.24 0.00 0.00 0.00
January 2, 2007.......... 1,750,651.79 0.00 0.00 0.00
July 2, 2007............. 1,814,725.65 68,655.43 68,655.43 68,655.43
January 2, 2008.......... 1,881,144.61 24,320.72 24,320.72 24,320.72
July 2, 2008............. 1,949,994.50 296,115.37 296,115.37 296,115.37
January 2, 2009.......... 75,548.42 306,953.18 306,953.18 306,953.18
July 2, 2009............. 0.00 318,187.55 318,187.55 318,187.55
January 2, 2010.......... 0.00 0.00 0.00 0.00
</TABLE>
- ---------------
* The information relating to principal payments on the Equipment Notes to be
purchased by each Trust as set forth in this Appendix III is indicative only
and subject to change.
III-1
<PAGE> 161
SERIES B
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR ------------------------------------------------------------------------------------------------
DISTRIBUTION DATES 55 65 77 82 091 092 098
- ------------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 2, 1997.......... $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
July 2, 1997............. 89,525.00 89,525.00 89,525.00 90,675.00 91,052.50 91,052.50 91,052.50
January 2, 1998.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 1998............. 89,525.00 89,525.00 89,525.00 90,675.00 91,052.50 91,052.50 91,052.50
January 2, 1999.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 1999............. 89,525.00 89,525.00 89,525.00 90,675.00 91,052.50 91,052.50 91,052.50
January 2, 2000.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2000............. 795,311.52 89,525.00 89,525.00 90,675.00 91,502.50 91,502.50 91,502.50
January 2, 2001.......... 1,209,593.07 92,314.11 92,314.11 181,350.00 0.00 0.00 0.00
July 2, 2001............. 1,016,400.91 947,762.50 947,762.50 0.00 91,052.50 91,052.50 91,052.50
January 2, 2002.......... 1,186,369.55 1,230,916.73 1,230,916.73 0.00 0.00 0.00 0.00
July 2, 2002............. 0.00 1,038,527.41 1,038,527.41 0.00 182,105.00 182,105.00 182,105.00
January 2, 2003.......... 0.00 808,629.30 808,629.30 0.00 0.00 0.00 0.00
July 2, 2003............. 0.00 0.00 0.00 90,675.00 0.00 0.00 0.00
January 2, 2004.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2004............. 0.00 0.00 0.00 532,991.62 241,757.94 241,757.94 241,757.94
January 2, 2005.......... 0.00 0.00 0.00 1,292,943.02 1,512,579.71 1,512,579.71 1,512,579.71
July 2, 2005............. 0.00 0.00 0.00 858,022.33 1,326,721.67 1,326,721.67 1,326,721.67
January 2, 2006.......... 0.00 0.00 0.00 1,215,068.03 834,198.13 834,198.13 834,198.13
July 2, 2006............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2007.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2007............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2008.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2008............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2009.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2009............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2010.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
REGULAR
DISTRIBUTION DATES 099 V0019 V0025 V0049
- ------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
January 2, 1997.......... $0.00 $0.00 $0.00 $0.00
July 2, 1997............. 91,052.50 21,000.00 21,000.00 21,000.00
January 2, 1998.......... 0.00 0.00 0.00 0.00
July 2, 1998............. 91,052.50 0.00 0.00 0.00
January 2, 1999.......... 0.00 31,500.00 31,500.00 31,500.00
July 2, 1999............. 91,052.50 0.00 0.00 0.00
January 2, 2000.......... 0.00 0.00 0.00 0.00
July 2, 2000............. 91,502.50 0.00 0.00 0.00
January 2, 2001.......... 0.00 0.00 0.00 0.00
July 2, 2001............. 91,052.50 0.00 0.00 0.00
January 2, 2002.......... 0.00 146,920.90 146,920.90 146,920.90
July 2, 2002............. 182,105.00 0.00 0.00 0.00
January 2, 2003.......... 0.00 0.00 0.00 0.00
July 2, 2003............. 0.00 0.00 0.00 0.00
January 2, 2004.......... 0.00 64,504.07 64,504.07 64,504.07
July 2, 2004............. 241,757.94 0.00 0.00 0.00
January 2, 2005.......... 1,512,579.71 0.00 0.00 0.00
July 2, 2005............. 1,326,721.67 0.00 0.00 0.00
January 2, 2006.......... 834,198.13 0.00 0.00 0.00
July 2, 2006............. 0.00 0.00 0.00 0.00
January 2, 2007.......... 0.00 0.00 0.00 0.00
July 2, 2007............. 0.00 0.00 0.00 0.00
January 2, 2008.......... 0.00 261,075.03 261,075.03 261.075.03
July 2, 2008............. 0.00 0.00 0.00 0.00
January 2, 2009.......... 0.00 0.00 0.00 0.00
July 2, 2009............. 0.00 0.00 0.00 0.00
January 2, 2010.......... 0.00 0.00 0.00 0.00
</TABLE>
III-2
<PAGE> 162
SERIES C
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR -----------------------------------------------------------------------------------------------
DISTRIBUTION DATES 55 65 77 82 091 092 098
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 2, 1997......... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
July 2, 1997............ 89,525.00 89,525.00 89,525.00 90,675.00 91,052.50 91,052.50 91,052.50
January 2, 1998......... 675,239.09 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 1998............ 670,534.38 89,525.00 89,525.00 631,347.50 91,052.50 91,052.50 91,052.50
January 2, 1999......... 1,037,621.78 733,278.81 733,278.81 1,050,809.70 0.00 0.00 0.00
July 2, 1999............ 750,712.66 688,523.10 688,523.10 760,209.46 91,052.50 91,052.50 91,052.50
January 2, 2000......... 1,120,995.16 1,056,327.32 1,056,327.32 1,135,242.59 0.00 0.00 0.00
July 2, 2000............ 131,621.98 770,163.64 770,163.64 848,007.02 91,052.50 91,052.50 91,052.50
January 2, 2001......... 0.00 1,048,907.17 1,048,907.17 17,458.72 879,558.83 879,558.83 879,558.83
July 2, 2001............ 0.00 0.00 0.00 0.00 1,006,799.80 1,006,799.80 1,006,799.80
January 2, 2002......... 0.00 0.00 0.00 0.00 1,378,224.16 1,378,224.16 1,378,224.16
July 2, 2002............ 0.00 0.00 0.00 0.00 765,428.06 765,428.06 765,428.06
January 2, 2003......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2003............ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2004......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2004............ 0.00 0.00 0.00 0.00 158,404.11 158,404.11 158,404.11
January 2, 2005......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2005............ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2006......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2006............ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2007......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2007............ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2008......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2008............ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2009......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2009............ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2010......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
REGULAR
DISTRIBUTION DATES 099 V0019 V0025 V0049
- ------------------------
<S> <C> <C> <C> <C>
January 2, 1997......... $ 0.00 $35,171.45 $35,171.45 $35,171.45
July 2, 1997............ 91,052.50 0.00 0.00 0.00
January 2, 1998......... 0.00 10,796.67 10,796.67 10,796.67
July 2, 1998............ 91,052.50 0.00 0.00 0.00
January 2, 1999......... 0.00 0.00 0.00 0.00
July 2, 1999............ 91,052.50 0.00 0.00 0.00
January 2, 2000......... 0.00 0.00 0.00 0.00
July 2, 2000............ 91,052.50 0.00 0.00 0.00
January 2, 2001......... 879,558.83 0.00 0.00 0.00
July 2, 2001............ 1,006,799.80 204,782.67 204,782.67 204,782.67
January 2, 2002......... 1,378,224.16 0.00 0.00 0.00
July 2, 2002............ 765,428.06 42,711.18 42,711.18 42,711.18
January 2, 2003......... 0.00 231,538.03 231,538.03 231,538.03
July 2, 2003............ 0.00 0.00 0.00 0.00
January 2, 2004......... 0.00 0.00 0.00 0.00
July 2, 2004............ 158,404.11 0.00 0.00 0.00
January 2, 2005......... 0.00 0.00 0.00 0.00
July 2, 2005............ 0.00 0.00 0.00 0.00
January 2, 2006......... 0.00 0.00 0.00 0.00
July 2, 2006............ 0.00 0.00 0.00 0.00
January 2, 2007......... 0.00 0.00 0.00 0.00
July 2, 2007............ 0.00 0.00 0.00 0.00
January 2, 2008......... 0.00 0.00 0.00 0.00
July 2, 2008............ 0.00 0.00 0.00 0.00
January 2, 2009......... 0.00 0.00 0.00 0.00
July 2, 2009............ 0.00 0.00 0.00 0.00
January 2, 2010......... 0.00 0.00 0.00 0.00
</TABLE>
III-3
<PAGE> 163
SERIES D
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR -----------------------------------------------------------------------------------------------------
DISTRIBUTION DATES 55 65 77 82 091 092 098
- ----------------------- ------------- ------------- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
January 2, 1997........ $1,506,029.12 $1,489,545.87 $1,489,545.87 $200,293.55 $ 0.00 $ 0.00 $ 0.00
July 2, 1997........... 500,028.74 436,092.89 436,092.89 500,231.55 84,982.33 84,982.33 84,982.33
January 2, 1998........ 282,775.23 890,942.41 890,942.41 963,795.10 0.00 0.00 0.00
July 2, 1998........... 0.00 516,859.80 516,859.80 47,246.75 84,982.33 84,982.33 84,982.33
January 2, 1999........ 0.00 242,392.13 242,392.13 0.00 997,323.67 997,323.67 997,323.67
July 2, 1999........... 0.00 0.00 0.00 0.00 697,646.62 697,646.62 697,646.62
January 2, 2000........ 0.00 0.00 0.00 0.00 1,172,721.14 1,172,721.14 1,172,721.14
July 2, 2000........... 0.00 0.00 0.00 0.00 805,331.45 805,331.45 805,331.45
January 2, 2001........ 0.00 0.00 0.00 0.00 406,129.08 406,129.08 406,129.08
July 2, 2001........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2002........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2002........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2003........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2003........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2004........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2004........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2005........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2005........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2006........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2006........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2007........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2007........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2008........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2008........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2009........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
July 2, 2009........... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
January 2, 2010........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
<CAPTION>
REGULAR
DISTRIBUTION DATES 099 V0019 V0025 V0049
- ----------------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
January 2, 1997........ $ 0.00 $ 0.00 $ 0.00 $ 0.00
July 2, 1997........... 84,982.33 0.00 0.00 0.00
January 2, 1998........ 0.00 39,289.29 39,289.29 39,289.29
July 2, 1998........... 84,982.33 149,449.39 149,449.39 149,449.39
January 2, 1999........ 997,323.67 0.00 0.00 0.00
July 2, 1999........... 697,646.62 0.00 0.00 0.00
January 2, 2000........ 1,172,721.14 0.00 0.00 0.00
July 2, 2000........... 805,331.45 0.00 0.00 0.00
January 2, 2001........ 406,129.08 0.00 0.00 0.00
July 2, 2001........... 0.00 0.00 0.00 0.00
January 2, 2002........ 0.00 0.00 0.00 0.00
July 2, 2002........... 0.00 178,375.50 178,375.50 178,375.50
January 2, 2003........ 0.00 0.00 0.00 0.00
July 2, 2003........... 0.00 0.00 0.00 0.00
January 2, 2004........ 0.00 0.00 0.00 0.00
July 2, 2004........... 0.00 0.00 0.00 0.00
January 2, 2005........ 0.00 0.00 0.00 0.00
July 2, 2005........... 0.00 0.00 0.00 0.00
January 2, 2006........ 0.00 0.00 0.00 0.00
July 2, 2006........... 0.00 0.00 0.00 0.00
January 2, 2007........ 0.00 0.00 0.00 0.00
July 2, 2007........... 0.00 0.00 0.00 0.00
January 2, 2008........ 0.00 0.00 0.00 0.00
July 2, 2008........... 0.00 0.00 0.00 0.00
January 2, 2009........ 0.00 0.00 0.00 0.00
July 2, 2009........... 0.00 0.00 0.00 0.00
January 2, 2010........ 0.00 0.00 0.00 0.00
</TABLE>
III-4
<PAGE> 164
SERIES E
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR -----------------------------------------------------
DISTRIBUTION DATES 091 092 098 099
- ----------------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
January 2, 1997........................................................ $196,791.29 $196,791.29 $196,791.29 $196,791.29
July 2, 1997........................................................... 413,389.23 413,389.23 413,389.23 413,389.23
January 2, 1998........................................................ 966,586.03 966,586.03 966,586.03 966,586.03
July 2, 1998........................................................... 510,917.51 510,917.51 510,917.51 510,917.51
January 2, 1999........................................................ 72,261.98 72,261.98 72,261.98 72,261.98
July 2, 1999........................................................... 0.00 0.00 0.00 0.00
January 2, 2000........................................................ 0.00 0.00 0.00 0.00
July 2, 2000........................................................... 0.00 0.00 0.00 0.00
January 2, 2001........................................................ 0.00 0.00 0.00 0.00
July 2, 2001........................................................... 0.00 0.00 0.00 0.00
January 2, 2002........................................................ 0.00 0.00 0.00 0.00
July 2, 2002........................................................... 0.00 0.00 0.00 0.00
January 2, 2003........................................................ 0.00 0.00 0.00 0.00
July 2, 2003........................................................... 0.00 0.00 0.00 0.00
January 2, 2004........................................................ 0.00 0.00 0.00 0.00
July 2, 2004........................................................... 0.00 0.00 0.00 0.00
January 2, 2005........................................................ 0.00 0.00 0.00 0.00
July 2, 2005........................................................... 0.00 0.00 0.00 0.00
January 2, 2006........................................................ 0.00 0.00 0.00 0.00
July 2, 2006........................................................... 0.00 0.00 0.00 0.00
January 2, 2007........................................................ 0.00 0.00 0.00 0.00
July 2, 2007........................................................... 0.00 0.00 0.00 0.00
January 2, 2008........................................................ 0.00 0.00 0.00 0.00
July 2, 2008........................................................... 0.00 0.00 0.00 0.00
January 2, 2009........................................................ 0.00 0.00 0.00 0.00
July 2, 2009........................................................... 0.00 0.00 0.00 0.00
January 2, 2010........................................................ 0.00 0.00 0.00 0.00
<CAPTION>
REGULAR
DISTRIBUTION DATES V0019 V0025 V0049
- ----------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
January 2, 1997........................................................ $ 0.00 $ 0.00 $ 0.00
July 2, 1997........................................................... 0.00 0.00 0.00
January 2, 1998........................................................ 91,853.07 91,853.07 91,853.07
July 2, 1998........................................................... 0.00 0.00 0.00
January 2, 1999........................................................ 125,279.87 125,279.87 125,279.87
July 2, 1999........................................................... 164,994.05 164,994.05 164,994.05
January 2, 2000........................................................ 174,250.21 174,250.21 174,250.21
July 2, 2000........................................................... 184,025.64 184,025.64 184,025.64
January 2, 2001........................................................ 170,255.70 170,255.70 170,255.70
July 2, 2001........................................................... 0.00 0.00 0.00
January 2, 2002........................................................ 10,022.36 10,022.36 10,022.36
July 2, 2002........................................................... 0.00 0.00 0.00
January 2, 2003........................................................ 0.00 0.00 0.00
July 2, 2003........................................................... 240,764.83 240,764.83 240,764.83
January 2, 2004........................................................ 0.00 0.00 0.00
July 2, 2004........................................................... 75,051.86 75,051.86 75,051.86
January 2, 2005........................................................ 0.00 0.00 0.00
July 2, 2005........................................................... 0.00 0.00 0.00
January 2, 2006........................................................ 0.00 0.00 0.00
July 2, 2006........................................................... 267,856.22 267,856.22 267,856.22
January 2, 2007........................................................ 0.00 0.00 0.00
July 2, 2007........................................................... 0.00 0.00 0.00
January 2, 2008........................................................ 0.00 0.00 0.00
July 2, 2008........................................................... 0.00 0.00 0.00
January 2, 2009........................................................ 0.00 0.00 0.00
July 2, 2009........................................................... 0.00 0.00 0.00
January 2, 2010........................................................ 0.00 0.00 0.00
</TABLE>
III-5
<PAGE> 165
[AMERICA WEST LOGO]
<PAGE> 166
PART II
INFORMATION NOT REQUIRED TO BE IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the issuance and distribution of the
securities, other than underwriting commissions*, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee................................................. $ 69,696.97
NASD Filing Fee...................................................... 23,500.00
Printing and Engraving Expenses...................................... 300,000.00
Accounting Fees and Expense.......................................... 190,000.00
Legal Fees and Expenses.............................................. 1,200,000.00
Trustee Fees and Expenses............................................ 40,000.00
Blue Sky Fees and Expenses........................................... 10,000.00
Rating Agency Fees................................................... 94,000.00
Miscellaneous Expenses............................................... 20,000.00
-------------
Total.............................................................. $1,947,196.97
============
</TABLE>
- ---------------
* Provided for on the cover page of the Prospectus.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") authorizes,
inter alia, a corporation generally to indemnify any person ("indemnitee") who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation, in a similar position with another corporation or
entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. With respect to actions or
suits by or in the right of the corporation; however, an indemnitee who acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation is generally limited to attorneys' fees and
other expenses, and no indemnification shall be made if such person is adjudged
liable to the corporation unless and only to the extent that a court of
competent jurisdiction determines that indemnification is appropriate. Section
145 further provides that any indemnification shall be made by the corporation
only as authorized in each specific case upon a determination by the (i)
stockholders, (ii) board of directors by a majority vote of a quorum of
disinterested directors so directs, that indemnification of the indemnitee is
proper because he has met the applicable standard of conduct. Section 145
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
by-law agreement, vote of stockholders or disinterested directors or otherwise.
Section 802 of the Company's By-laws provides, in substance, that
directors, officers, employees and agents shall be indemnified to the fullest
extent permitted by Section 145 of the DGCL. Article 12.0 of the Company's
Restated Certificate of Incorporation limits the liability of directors of the
Company to the Company or its stockholders (in their capacity as directors but
not in their capacity as officers) to the fullest extent permitted by the DGCL.
Specifically, directors of the Company will not be personally liable for
monetary damages for breach of a director's fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments of dividends or unlawful stock repurchase or redemptions as
provided in section 174 of the DGCL or (iv) for any
II-1
<PAGE> 167
transaction from which the director derived an improper personal benefit. The
Restated Certificate of Incorporation also provides that if the DGCL is amended
after the approval of the Restated Certificate of Incorporation to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Company will be eliminated or
limited to the full extent permitted by the DGCL, as so amended.
The Company has entered into indemnification agreements with each of its
directors providing for indemnification to the fullest extent permitted by the
laws of the State of Delaware. These agreements provide for specific procedures
to better assure the directors' rights to indemnification, including procedures
for directors to submit claims, for determination of directors entitled to
indemnification (including the allocation of the burden of proof and selection
of a reviewing party) and for enforcement of directors' indemnification rights.
The Underwriting Agreement included herewith as Exhibit 1.1 provides
indemnification to the extent set forth therein. The Company has entered into an
agreement with GPA Group plc pursuant to which, among other things, GPA has
agreed to indemnify each of the Company's directors, each of its officers who
shall sign this Registration Statement, and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, against certain liabilities arising under
applicable securities laws with respect to certain information in the
Prospectus.
The Company maintains directors' and officers' liability insurance.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
1.1* Underwriting Agreement
4.1* Form of America West Airlines Pass Through Certificates, Series 1996-1A (included
in Exhibit 4.7)
4.2* Form of America West Airlines Pass Through Certificates, Series 1996-1B (included
in Exhibit 4.8)
4.3* Form of America West Airlines Pass Through Certificates, Series 1996-1C (included
in Exhibit 4.9)
4.4* Form of America West Airlines Pass Through Certificates, Series 1996-1D (included
in Exhibit 4.10)
4.5* Form of America West Airlines Pass Through Certificates, Series 1996-1E (included
in Exhibit 4.11)
4.6* Pass Through Trust Agreement, dated as of November , 1996 between America West
Airlines, Inc. and Fleet National Bank, as Trustee
4.7* Trust Supplement No. 1996-1A, dated as of November , 1996 between America West
Airlines, Inc. and Fleet National Bank, as Trustee
4.8* Trust Supplement No. 1996-1B, dated as of November , 1996 between America West
Airlines, Inc. and Fleet National Bank, as Trustee
4.9* Trust Supplement No. 1996-1C, dated as of November , 1996 between America West
Airlines, Inc. and Fleet National Bank, as Trustee
4.10* Trust Supplement No. 1996-1D, dated as of November , 1996 between America West
Airlines, Inc. and Fleet National Bank, as Trustee
4.11* Trust Supplement No. 1996-1E, dated as of November , 1996 between America West
Airlines, Inc. and Fleet National Bank, as Trustee
</TABLE>
II-2
<PAGE> 168
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
4.12* Irrevocable Revolving Credit Agreement Class A Certificates, dated as of November
, 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., acting through its New York Branch, as Liquidity Provider
4.13* Irrevocable Revolving Credit Agreement Class B Certificates, dated as of November
, 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., acting through its New York Branch, as Liquidity Provider
4.14* Irrevocable Revolving Credit Agreement Class C Certificates, dated as of November
, 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., acting through its New York Branch, as Liquidity Provider
4.15* Intercreditor Agreement, dated as of November , 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., acting through its New
York Branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class
C Liquidity Provider, and Fleet National Bank, as Subordination Agent
4.16** Form of Refunding Agreement [GPA 1989 BN-6], dated as of November , 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
4.17** Form of Refunding Agreement [GPA 1989 BN-10], dated as of November , 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
4.18** Form of Refunding Agreement [GPA 1990 AWA-13], dated as of November , 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 1990 AWA-E1], dated as of November , 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, 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 Second Amended and Restated Aircraft Lease 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 , 1996, between Wilmington Trust
Company and America West Airlines, Inc.
4.21** 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 , 1996, between Wilmington Trust
Company and America West Airlines, Inc.
</TABLE>
II-3
<PAGE> 169
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
4.22** Form of Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13], dated as
of September 21, 1990, Amended and Restated as of November , 1996, between
Wilmington Trust Company and America West Airlines, Inc.
4.23** Form of Amended and Restated Engine Lease Agreement [GPA 1990 AWA-E1] dated as of
December 12, 1990, Amended and Restated as of November , 1996 between
Wilmington Trust Company and America West Airlines, Inc.
4.24** Form of Second Amended and Restated Trust Indenture and Security Agreement [GPA
1989 BN-6], dated as of November , 1996 between Wilmington Trust Company, as
Owner Trustee, and The Chase Manhattan Bank, as Indenture Trustee
4.25** Form of Second Amended and Restated Trust Indenture and Security Agreement [GPA
1989 BN-10], dated as of November , 1996 between Wilmington Trust Company, as
Owner Trustee, and The Chase Manhattan Bank, as Indenture Trustee
4.26** Form of First Amended and Restated Trust Indenture and Security Agreement [GPA
1989 AWA-13], dated as of November , 1996 between Wilmington Trust Company, as
Owner Trustee, and Fleet National Bank, as Indenture Trustee
4.27** Form of First Amended and Restated Trust Indenture and Security Agreement [GPA
1990 AWA-E1] dated as of November , 1996 between Wilmington Trust Company, as
Owner Trustee, and Fleet National Bank, as Indenture Trustee
4.28** Form of Series A Equipment Note, dated November , 1996 issued by Wilmington
Trust Company, as Owner Trustee, payable to the Pass Through Trustee (included in
each of Exhibits 4.24, 4.25, 4.26 and 4.27)
4.29** Form of Series B Equipment Note, dated November , 1996 issued by Wilmington
Trust Company, as Owner Trustee, payable to the Pass Through Trustee (included in
each of Exhibits 4.24, 4.25, 4.26 and 4.27)
4.30** Form of Series C Equipment Note, dated November , 1996 issued by Wilmington
Trust Company, as Owner Trustee, payable to the Pass Through Trustee (included in
each of Exhibits 4.24, 4.25, 4.26 and 4.27)
4.31** Form of Series D Equipment Note, dated November , 1996 issued by Wilmington
Trust Company, as Owner Trustee, payable to the Pass Through Trustee (included in
each of Exhibits 4.24, 4.25, 4.26 and 4.27)
4.32** Form of Series E Equipment Note, dated November , 1996 issued by Wilmington
Trust Company, as Owner Trustee, payable to the Pass Through Trustee (included in
Exhibits 4.26 and 4.27)
5.1* Opinion of Andrews & Kurth L.L.P., counsel for America West Airlines, Inc.,
relating to legality of the Certificates
8.1* Opinion of Andrews & Kurth L.L.P., counsel for America West Airlines, Inc.,
regarding tax matters relating to the Certificates
8.2* Opinion of Shipman & Goodwin LLP, counsel to Fleet National Bank, regarding tax
matters relating to the Certificates
12.1* Computation of Ratio of Earnings to Fixed Charges
23.1* Consent of KPMG Peat Marwick LLP (included at page S-1)
23.2* Consent of Andrews & Kurth L.L.P. (included as part of Exhibits 5.1 and 8.1)
23.3* Consent of Shipman & Goodwin LLP (included as part of Exhibit 5.2)
23.4 Consent of Aircraft Information Services, Inc.(1)
23.5 Consent of BK Associates, Inc.(1)
23.6 Consent of Morten Beyer and Associates(1)
</TABLE>
II-4
<PAGE> 170
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
24.1 Power of Attorney(1)
25.1* Form T-1 Statement of Eligibility of Fleet National Bank
</TABLE>
- ---------------
* Filed herewith.
** Filed herewith. With respect to such Exhibits, separate agreements have been
entered into with respect to each Aircraft and Spare Engine. Except for
differences in designations, dollar amounts, interest rates, percentages,
final distribution dates, aircraft registration numbers, manufacturer's
serial numbers for aircraft and engines and the like, as applicable, there
are no material details in which any such agreement not filed herewith
differ from the corresponding Exhibit for the forms of such documents.
(1) Included in the Company's Registration Statement on Form S-3 (File No.
333-14691) filed with the Commission on October 23, 1996 and incorporated by
reference herein.
(B) FINANCIAL STATEMENT SCHEDULE
The following financial statement schedule is filed as part of this
Registration Statement, but not included in the Prospectus.
<TABLE>
<CAPTION>
SCHEDULE PAGE
-------- ----
<S> <C>
Independent Auditors' Report on Schedule and Consent.......................... S-1
Schedule II -- Valuation and Qualifying Accounts.............................. S-2
</TABLE>
All other schedules for which provision is made in Regulation S-X of the
Commission are not required under the related instructions or are inapplicable
or the required information is included in the financial statements or notes
thereto and, therefore, have been omitted.
ITEM 17. UNDERTAKINGS
(a) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of competent jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(c) The Company hereby undertakes that for purposes of determining any
liability under the Securities Act of 1933, (i) the information omitted
from the form of prospectus filed as part of this registrations
statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of
this registrations statement as of the time it was declared effective
and (2) each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 171
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Phoenix, State of Arizona, on November 20, 1996.
AMERICA WEST AIRLINES, INC.
By /s/ WILLIAM A. FRANKE
-----------------------------------
William A. Franke, Chairman of the
Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------- -------------------
<S> <C> <C>
/s/ WILLIAM A. FRANKE Chairman of the Board, November 20, 1996
- --------------------------------------------- President and Chief
William A. Franke Executive Officer
* Senior Vice President and November 20, 1996
- --------------------------------------------- Chief Financial Officer
W. Douglas Parker
* Vice President and November 20, 1996
- --------------------------------------------- Controller
Michael R. Carreon
* Director November 20, 1996
- ---------------------------------------------
Julia Chang Bloch
* Director November 20, 1996
- ---------------------------------------------
Stephen F. Bollenbach
* Director November 20, 1996
- ---------------------------------------------
Frederick W. Bradley, Jr.
* Director November 20, 1996
- ---------------------------------------------
James G. Coulter
* Director November 20, 1996
- ---------------------------------------------
John F. Fraser
* Director November 20, 1996
- ---------------------------------------------
John L. Goolsby
* Director November 20, 1996
- ---------------------------------------------
Richard C. Kraemer
* Director November 20, 1996
- ---------------------------------------------
John R. Power, Jr.
</TABLE>
II-6
<PAGE> 172
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- -------------------------- -------------------
<S> <C> <C>
* Director November 20, 1996
- ---------------------------------------------
Larry L. Risley
* Director November 20, 1996
- ---------------------------------------------
Frank B. Ryan
* Director November 20, 1996
- ---------------------------------------------
Richard P. Schifter
* Director November 20, 1996
- ---------------------------------------------
John F. Tierney
* Director November 20, 1996
- ---------------------------------------------
Raymond S. Troubh
*By: /s/ WILLIAM A. FRANKE
William A. Franke, Attorney-in-fact
</TABLE>
II-7
<PAGE> 173
INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors and Stockholders
America West Airlines, Inc.
The audits referred to in our report dated March 20, 1996, included the
related financial statement schedule for the year ended December 31, 1995, the
period August 26, 1994 through December 31, 1994, the period January 1, 1994
through August 25, 1994 and for the year ended December 31, 1993, included
herein. The financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statement schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.
We consent to the use of our reports included herein and to the reference
to our Firm under the headings "Selected Financial and Operating Data" and
"Experts" in the Prospectus.
The audit reports on the financial statements of America West Airlines,
Inc. referred to above contains an explanatory paragraph that states that as
discussed in Notes 14 and 15 to the financial statements, on August 25, 1994,
America West Airlines, Inc. emerged from bankruptcy. The financial statements of
the Reorganized Company reflect the impact of adjustments to reflect the fair
value of assets and liabilities under fresh start reporting. As a result, the
financial statements of the Reorganized Company are presented on a different
basis of accounting than those of the Predecessor Company and, therefore, are
not comparable in all respects.
/s/ KPMG Peat Marwick LLP
Phoenix, Arizona
November 18, 1996
S-1
<PAGE> 174
AMERICA WEST AIRLINES, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1995,
THE PERIODS AUGUST 26, 1994 THROUGH DECEMBER 31, 1994,
JANUARY 1, 1994 THROUGH AUGUST 25, 1994
AND THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE
BEGINNING AT END
DESCRIPTION OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD
- -------------------------------------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Allowance for doubtful receivables:
Year ended December 31, 1995.................... $3,531 $ 2,600 $3,616 $ 2,515
====== ====== ====== ======
Period August 26, 1994 to December 31, 1994..... $2,833 $ 1,074 $ 376 $ 3,531
====== ====== ====== ======
Period January 1, 1994 to August 25, 1994....... $3,030 $ 4,742 $4,939 $ 2,833
====== ====== ====== ======
Year ended December 31, 1993.................... $2,542 $ 5,474 $4,986 $ 3,030
====== ====== ====== ======
Reserve for obsolescence:
Year ended December 31, 1995.................... $ 483 $ 1,664 $ 32 $ 2,115
====== ====== ====== ======
Period August 26, 1994 to December 31, 1994..... $ -- $ 483 $ -- $ 483
====== ====== ====== ======
Period January 1, 1994 to August 25, 1994....... $7,231 $ 794 $8,025(a) $ --
====== ====== ====== ======
Year ended December 31, 1993.................... $6,921 $ 902 $ 592 $ 7,231
====== ====== ====== ======
</TABLE>
- ---------------
(a) Includes fresh start adjustment of approximately $7.9 million.
S-2
<PAGE> 175
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<C> <S>
1.1* -- Underwriting Agreement
4.1* -- Form of America West Airlines Pass Through Certificates, Series
1996-1A (included in Exhibit 4.7)
4.2* -- Form of America West Airlines Pass Through Certificates, Series
1996-1B (included in Exhibit 4.8)
4.3* -- Form of America West Airlines Pass Through Certificates, Series
1996-1C (included in Exhibit 4.9)
4.4* -- Form of America West Airlines Pass Through Certificates, Series
1996-1D (included in Exhibit 4.10)
4.5* -- Form of America West Airlines Pass Through Certificates, Series
1996-1E (included in Exhibit 4.11)
4.6* -- Pass Through Trust Agreement, dated as of November , 1996 between
America West Airlines, Inc. and Fleet National Bank, as Trustee
4.7* -- Trust Supplement No. 1996-1A, dated as of November , 1996 between
America West Airlines, Inc. and Fleet National Bank, as Trustee
4.8* -- Trust Supplement No. 1996-1B, dated as of November , 1996 between
America West Airlines, Inc. and Fleet National Bank, as Trustee
4.9* -- Trust Supplement No. 1996-1C, dated as of November , 1996 between
America West Airlines, Inc. and Fleet National Bank, as Trustee
4.10* -- Trust Supplement No. 1996-1D, dated as of November , 1996 between
America West Airlines, Inc. and Fleet National Bank, as Trustee
4.11* -- Trust Supplement No. 1996-1E, dated as of November , 1996 between
America West Airlines, Inc. and Fleet National Bank, as Trustee
4.12* -- Irrevocable Revolving Credit Agreement Class A Certificates, dated as
of November , 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., acting
through its New York Branch, as Liquidity Provider
4.13* -- Irrevocable Revolving Credit Agreement Class B Certificates, dated as
of November , 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., acting
through its New York Branch, as Liquidity Provider
4.14* -- Irrevocable Revolving Credit Agreement Class C Certificates, dated as
of November , 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., acting
through its New York Branch, as Liquidity Provider
4.15* -- Intercreditor Agreement, dated as of November , 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., acting through its New
York Branch, as Class A Liquidity Provider, Class B Liquidity
Provider and Class C Liquidity Provider, and Fleet National Bank, as
Subordination Agent
</TABLE>
<PAGE> 176
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<C> <S>
4.16** -- Form of Refunding Agreement [GPA 1989 BN-6], dated as of November ,
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
4.17** -- Form of Refunding Agreement [GPA 1989 BN-10], dated as of November
, 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
4.18** -- Form of Refunding Agreement [GPA 1990 AWA-13], dated as of November
, 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 1990 AWA-E1], dated as of November
, 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, 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 Second Amended and Restated Aircraft Lease 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
, 1996, between Wilmington Trust Company and America West Airlines,
Inc.
4.21** -- 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
, 1996, between Wilmington Trust Company and America West Airlines,
Inc.
4.22** -- Form of Amended and Restated Aircraft Lease Agreement [GPA 1990
AWA-13], dated as of September 21, 1990, Amended and Restated as of
November , 1996, between Wilmington Trust Company and America West
Airlines, Inc.
4.23** -- Form of Amended and Restated Engine Lease Agreement [GPA 1990 AWA-E1]
dated as of December 12, 1990, Amended and Restated as of November
, 1996 between Wilmington Trust Company and America West
Airlines, Inc.
4.24** -- Form of Second Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-6], dated as of November , 1996 between
Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan
Bank, as Indenture Trustee
4.25** -- Form of Second Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 BN-10], dated as of November , 1996 between
Wilmington Trust Company, as Owner Trustee, and The Chase Manhattan
Bank, as Indenture Trustee
4.26** -- Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1989 AWA-13], dated as of November , 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
</TABLE>
<PAGE> 177
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- ------------------------------------------------------------------------
<C> <S>
4.27** -- Form of First Amended and Restated Trust Indenture and Security
Agreement [GPA 1990 AWA-E1] dated as of November , 1996 between
Wilmington Trust Company, as Owner Trustee, and Fleet National Bank,
as Indenture Trustee
4.28** -- Form of Series A Equipment Note, dated November , 1996 issued by
Wilmington Trust Company, as Owner Trustee, payable to the Pass
Through Trustee (included in each of Exhibits 4.24, 4.25, 4.26 and
4.27)
4.29** -- Form of Series B Equipment Note, dated November , 1996 issued by
Wilmington Trust Company, as Owner Trustee, payable to the Pass
Through Trustee (included in each of Exhibits 4.24, 4.25, 4.26 and
4.27)
4.30** -- Form of Series C Equipment Note, dated November , 1996 issued by
Wilmington Trust Company, as Owner Trustee, payable to the Pass
Through Trustee (included in each of Exhibits 4.24, 4.25, 4.26 and
4.27)
4.31** -- Form of Series D Equipment Note, dated November , 1996 issued by
Wilmington Trust Company, as Owner Trustee, payable to the Pass
Through Trustee (included in each of Exhibits 4.24, 4.25, 4.26 and
4.27)
4.32** -- Form of Series E Equipment Note, dated November , 1996 issued by
Wilmington Trust Company, as Owner Trustee, payable to the Pass
Through Trustee (included in each of Exhibits 4.26 and 4.27)
5.1* -- Opinion of Andrews & Kurth L.L.P., counsel for America West Airlines,
Inc., relating to legality of the Certificates
8.1* -- Opinion of Andrews & Kurth L.L.P., counsel for America West Airlines,
Inc., regarding tax matters relating to the Certificates
8.2* -- Opinion of Shipman & Goodwin LLP, counsel to Fleet National Bank,
regarding tax matters relating to the Certificates
12.1* -- Computation of Ratio of Earnings to Fixed Charges
23.1* -- Consent of KPMG Peat Marwick LLP (included at page S-1)
23.2* -- Consent of Andrews & Kurth L.L.P. (included as part of Exhibits 5.1
and 8.1)
23.3* -- Consent of Shipman & Goodwin LLP (included as part of Exhibit 5.2)
23.4 -- Consent of Aircraft Information Services, Inc.(1)
23.5 -- Consent of BK Associates, Inc.(1)
23.6 -- Consent of Morten Beyer and Associates(1)
24.1 -- Power of Attorney(1)
25.1* -- Form T-1 Statement of Eligibility of Fleet National Bank
</TABLE>
- ---------------
* Filed herewith.
** Filed herewith. With respect to such Exhibits, separate agreements have been
entered into with respect to each Aircraft and Spare Engine. Except for
differences in designations, dollar amounts, interest rates, percentages,
final distribution dates, aircraft registration numbers, manufacturer's
serial numbers for aircraft and engines and the like, as applicable, there
are no material details in which any such agreement not filed herewith
differ from the corresponding Exhibit for the forms of such documents.
(1) Included in the Company's Registration Statement on Form S-3 (File No.
333-14691) filed with the Commission on October 23, 1996 and incorporated by
reference herein.
<PAGE> 1
Exhibit 1.1
AMERICA WEST AIRLINES, INC.
1996-1 PASS THROUGH TRUSTS
$___________
Pass Through Certificates, Series 1996-1A, 1996-1B, 1996-1C, 1996-1D and
1996-1E
UNDERWRITING AGREEMENT
November __, 1996
Morgan Stanley & Co. Incorporated
Citicorp Securities, Inc.
Lehman Brothers Inc.
Salomon Brothers Inc
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
1. Introductory. It is proposed that Fleet National Bank, as
trustee under each of the Trusts (as defined below) (each, a "Trustee"), issue
and sell to Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc.,
Lehman Brothers Inc. and Salomon Brothers Inc, as underwriters (collectively,
the "Underwriters"), its pass through certificates in the aggregate principal
amounts set forth on Schedule I hereto and with the interest rates and final
distribution dates set forth on Schedule II hereto (the "Offered Certificates")
on the terms and conditions stated herein. As used herein, unless the context
otherwise requires, the term "you" shall mean Morgan Stanley & Co.
Incorporated.
The Offered Certificates will be issued pursuant to a pass
through trust agreement, dated as of November __, 1996 (the "Basic Agreement"),
and five separate supplements thereto, dated as of November __, 1996 (each, a
"Trust Supplement" and together with the Basic Agreement, collectively, the
"Pass Through Trust Agreements") between America West Airlines, Inc., a
Delaware corporation (the "Company"), and the Trustee, relating to the creation
and administration of America West Airlines Pass Through Trust Series 1996-1A
(the "Class A Trust"), America West Airlines Pass Through Trust Series 1996-1B
(the "Class B Trust"), America West Airlines Pass Through Trust Series 1996-1C
(the "Class C Trust"), America West Airlines Pass Through Trust Series 1996-1D
(the "Class D Trust") and America West Airlines Pass Through Trust Series
1996-1E (the "Class E Trust"
<PAGE> 2
and, together with the Class A Trust, the Class B Trust, the Class C Trust and
the Class D Trust, the "Trusts"). Certain amounts of interest payable on the
Offered Certificates to be issued by the Class A Trust, the Class B Trust and
the Class C Trust will be entitled to the benefits of a separate liquidity
facility for each such Trust. Kredietbank N.V., acting through its New York
branch (the "Liquidity Provider"), will enter into three irrevocable revolving
credit agreements (each, a "Liquidity Facility"), to be dated as of November
__, 1996, for the benefit of the holders of the Offered Certificates issued by
the Class A Trust, the Class B Trust and the Class C Trust, respectively. The
Liquidity Provider and the holders of the Offered Certificates will be entitled
to the benefits of an Intercreditor Agreement to be dated as of November __,
1996 (the "Intercreditor Agreement") among the Trusts, Fleet National Bank, as
subordination agent (the "Subordination Agent"), and the Liquidity Provider.
The Leases (as defined in the Pass Through Trust Agreements) provide that the
aggregate amounts unconditionally payable by the Company under the Leases will
be at least sufficient to pay in full when due all scheduled amounts required
to be paid on the Equipment Notes, although neither the Offered Certificates
nor the Equipment Notes (as defined in the Pass Through Trust Agreements) are
not obligations of the Company or are guaranteed by the Company.
Capitalized terms used but not defined herein have the meanings
assigned to them in the Pass Through Trust Agreements, or, if not defined
therein, the meanings specified in each of the eleven Indentures referred to in
such Pass Through Trust Agreements or in each of the eleven Leases referred to
in such Indentures.
The Company understands that the Underwriters propose to make an
offering of the Offered Certificates on the terms, subject to the conditions
and in the manner set forth in the Prospectus (as defined below) and Section 5
hereof.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-3 under the Act (the "registration statement"), including a prospectus
subject to completion relating to the Offered Certificates. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement becomes effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement; provided, however, that if it is contemplated,
at the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before the
offering of the Offered Certificates may commence, then the term "Registration
Statement" as used in this Agreement means the registration statement as
amended by said post- effective amendment and any additional post-effective
amendment that is subsequently filed with the Commission. The term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement, as such prospectus may subsequently be
amended or supplemented, including, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act, the prospectus in the form included in
the Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectus filed with the Commission pursuant to
Rule 424(b).
2
<PAGE> 3
The term "Preliminary Prospectus" as used in this Agreement means the
prospectus subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the Commission, and as such prospectus shall have been amended from time to
time prior to the date of the Prospectus. Any reference herein to the
registration statement, the Registration Statement, any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the Act, as of the
date of the registration statement, the Registration Statement, such
Preliminary Prospectus or the Prospectus, as the case may be, and any reference
to any amendment or supplement to the registration statement, the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Exchange Act") and deemed
incorporated by reference pursuant to Form S-3 under the Act. As used herein,
the term "Incorporated Documents" means the documents which at the time are
incorporated by reference in the registration statement, the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto.
2. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, each Underwriter and GPA
(as hereinafter defined) on and as of the date hereof and on and as of the
Closing Date (as defined in Section 4 hereof) that:
(a) The Company meets the requirements for use of Form S-3 under
the Act. The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-
effective amendment thereto shall become effective complied and will
comply in all material respects with the provisions of the Act and did
not and will not at any such time contain an untrue statement of a
material fact or omit to state a material fact with respect to the
America West Information (as defined in Annex I hereto) required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus when filed with the Commission under Rule
424(b) under the Act complied and will comply in all material respects
with the provisions of the Act and on the date hereof, at the time it is
furnished to the Underwriters for their use and on the Closing Date did
not and will not at any such time contain an untrue statement of a
material fact or omit to state a material fact with respect to the
America West Information necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The representations and warranties made in this
paragraph (a) shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished by you in
writing to the Company or GPA expressly for use in the Registration
Statement or the Prospectus nor to any statements or omissions in that
part of the Registration Statement that shall constitute the Statement
of Eligibility under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), on Form T-1.
(b) The Incorporated Documents heretofore filed were filed in a
timely manner and, when they were filed (or, if any amendment with
respect to any such document was filed, when such amendment was filed),
complied in all material respects with the
3
<PAGE> 4
requirements of the Exchange Act and did not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and any further Incorporated Documents will, when so filed,
be filed in a timely manner and will comply in all material respects
with the requirements of the Exchange Act and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(c) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own, lease and operate
its property and to conduct its business as described in the Prospectus
and to enter into and perform its obligations under this Agreement and
the other Operative Documents to which it is or will be a party; and the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or lease
of property or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse
effect on the condition (financial or otherwise), or the earnings,
business affairs, business prospects or properties of the Company or on
the ability of the Company to perform its obligations under this
Agreement and the other Operative Documents to which it is or will be a
party or on the consummation of the transactions contemplated herein or
therein (a "Material Adverse Effect").
(d) The Company has no subsidiaries.
(e) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations, agreements,
employee benefit plans or the exercise of the warrants referred to in
the Prospectus). All of the issued and outstanding shares of capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable.
(f) Except as described in the Prospectus, the Company is not
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it is
a party or by which it may be bound or to which any of its properties
may be subject, except for such defaults that would not have a Material
Adverse Effect. The execution, delivery and performance of this
Agreement and the other Operative Documents to which the Company is or
will be a party and the consummation of the transactions contemplated
herein and therein have been duly authorized by all necessary corporate
action of the Company, do not require any stockholder approval, or
approval or consent of any trustee or holder of any material
indebtedness or material obligations of the Company, except such as have
been duly obtained and are in full force and effect, and will not result
in any breach of any of the terms, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company pursuant to any indenture, loan agreement, contract or other
instrument to which the Company is a party or by which the Company may
be bound
4
<PAGE> 5
or to which any of the property or assets of the Company is subject, the
failure of which to obtain or which breach, default, lien, charge or
encumbrance, individually or in the aggregate, would have a Material
Adverse Effect, nor will any such execution, delivery or performance
result in any violation of the provisions of the certificate of
incorporation or by-laws of the Company, or any statute or any rule,
regulation or order of any governmental agency or body or any court
having jurisdiction over the Company.
(g) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by the Company for the valid authorization, execution
and delivery by the Company of this Agreement and the other Operative
Documents to which the Company is or will be a party and for the
consummation by the Company of the transactions contemplated herein and
therein, except such as may be required under (i) the securities or Blue
Sky laws of the various states, (ii) the Sections of Title 49 of the
United States Code relating to aviation, as amended (the "Aviation
Act"), and filings or recordings with the Federal Aviation
Administration (the "FAA"), and (iii) the Uniform Commercial Code as is
in effect in the State of Arizona and filings thereunder, which filings
listed in the preceding clauses (ii) and (iii) shall have been made, or
duly presented for filing, on or prior to the Closing Date.
(h) The Company has all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and has made
all declarations and filings with, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all
courts and other tribunals, to own, lease, license and use its
properties and assets and to conduct its business in the manner
described in the Prospectus, except to the extent that the failure to so
obtain, declare or file would not have a Material Adverse Effect.
(i) Except as disclosed in the Prospectus, there is no action,
suit or proceeding before or by any governmental agency or body or
court, domestic or foreign, now pending or, to the best knowledge of the
Company, threatened against the Company or any of its properties that
could reasonably be expected to result in a Material Adverse Effect; all
pending legal or governmental proceedings to which the Company is a
party or which affect any of its properties that are not described in
the Prospectus including ordinary routine litigation incidental to its
business, are not, singly or in the aggregate, reasonably expected to
have a Material Adverse Effect.
(j) The Company has not taken any corporate action or, to the
best knowledge of the Company, have any other steps been taken or legal
proceedings been started or threatened against it (i) as a result of
which it could become bankrupt, (ii) for its winding-up, dissolution or
reorganization or (iii) for the appointment of a liquidator, receiver,
administrator, administrative receiver, examiner or similar officer of
it or of any or all its assets or revenues.
(k) This Agreement and the other Operative Documents to which
the Company is a party have been duly executed and delivered by the
Company and the other
5
<PAGE> 6
Operative Documents to which the Company will be a party will be duly
executed and delivered by the Company on or prior to the Closing Date.
(l) The Operative Documents (other than this Agreement) to which
the Company is or will be a party will constitute, when duly executed
and delivered by the Company, assuming that such Operative Documents
have been duly authorized, executed and delivered by, and constitute the
legal, valid and binding obligations of, each other party thereto, the
legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, except as enforcement
thereof may be limited by (i) bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium, or other similar laws now or hereinafter in effect relating
to creditors' rights generally and as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), or (ii) with respect to
indemnification and contribution provisions, applicable law.
(m) The financial statements included in the Prospectus,
together with the related notes thereto, present fairly the financial
position of the Company at the dates indicated and the results of
operations and cash flows of the Company for the periods specified.
Such financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved, except as otherwise
stated in the Prospectus.
(n) Since the respective dates as of which information is given
in the Prospectus, except as otherwise stated therein, there has been no
material adverse change in the condition (financial or otherwise), or in
the earnings, business affairs, business prospects or properties of the
Company, whether or not arising in the ordinary course of business (a
"Material Adverse Change"). Except as disclosed in the Prospectus, the
Company has no material (i) contingent obligations, (ii) forward or
long-term commitments or (iii) unrealized or anticipated losses from
any unfavorable commitments.
(o) The Company is a "citizen of the United States" within the
meaning of Section 40102(a)(15) of Title 49 of the United States Code,
as amended, holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to Chapter 447 of Title 49 of the
United States Code, as amended, for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more cargo.
(p) When executed, authenticated, issued and delivered in the
manner provided for in the Pass Through Trust Agreements and this
Agreement and sold and paid for as provided in this Agreement, the
Offered Certificates will be legally and validly issued and will be
entitled to the benefits of the related Pass Through Trust Agreements.
(q) Except as disclosed in the Prospectus, the Company has good
and sufficient title for the use made and proposed to be made of all of
its properties, whether real or personal, in each case free from liens,
encumbrances and defects except where the failure to have such title
would not have a Material Adverse Effect;
6
<PAGE> 7
and except as disclosed in the Prospectus, the Company holds any leased
real or personal property under valid and enforceable leases with no
exceptions that would have a Material Adverse Effect.
(r) The statements in the Prospectus describing various
provisions of the Leases provide accurate summaries of such provisions
in all material respects.
(s) Except as disclosed in the Prospectus, the Company is not in
violation of any Federal, state or local law relating to discrimination
in the hiring, promotion or pay of employees nor any applicable wage or
hour laws that, singly or in the aggregate, could have a Material
Adverse Effect. There is (i) no significant unfair labor practice
complaint pending against the Company or, to the best knowledge of the
Company, threatened against the Company, before the National Labor
Relations Board, the National Mediation Board or any state or local
labor relations or mediation board, and no significant grievance or
significant arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company or, to
the best knowledge of the Company, threatened against the Company, and
(ii) no labor dispute in which the Company is involved nor, to the best
knowledge of the Company, is any labor dispute imminent, other than
routine disciplinary and grievance matters, except as disclosed in the
Prospectus. The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the regulations and
published interpretations thereunder, including, but not limited to
Sections 4975 and 4980B of the Internal Revenue Code of 1986, as amended
(the "Code"). There are no "pension plans" established or maintained by
the Company or "multi-employer pension plans" to which the Company is a
contributor that are intended to be qualified under Section 401(a) of
the Code.
(t) Except as disclosed in the Prospectus, the Company is not
in violation of any Federal, State or local laws and regulations
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of toxic or hazardous substances,
materials or wastes, or petroleum and petroleum products ("Materials of
Environmental Concern"), or otherwise relating to the protection of
human health and safety, or the storage, disposal, transport or handling
of Materials of Environmental Concern (collectively, "Environmental
Laws"), which violation includes, but is not limited to, noncompliance
with any permits or other governmental authorizations, excluding any
violations which individually or in the aggregate would not have a
Material Adverse Effect; the Company has not received any communication
(written or oral), whether from a governmental authority or otherwise,
alleging any such violation or noncompliance, and there are no
circumstances, either past, present or that are reasonably foreseeable,
that may lead to such violation in the future; there is no pending or
threatened claim, action, investigation or notice (written or oral) by
any person or entity alleging potential liability for investigatory,
cleanup, or governmental responses costs, or natural resources or
property damages, or personal injuries, attorney's fees or penalties
relating
7
<PAGE> 8
to (i) the presence, or release into the environment, of any Material of
Environmental Concern at any location owned or operated by the Company,
now or in the past, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law (collectively,
"Environmental Claims"); and there are no past or present actions,
activities, circumstances, conditions, events or incidents, that could
form the basis of any Environmental Claim against the Company or against
any person or entity whose liability for any Environmental Claim the
Company has retained or assumed either contractually or by operation of
law. In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company, in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or
any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties); on the basis
of such review, the Company has reasonably concluded that such
associated costs and liabilities could not singly or in the aggregate,
have a Material Adverse Effect.
(u) All tax returns required to be filed by the Company have
been timely filed and such returns are true, complete and correct in all
material respects. All taxes due or claimed to be due from the Company
that are due and payable have been paid, other than those (i) being
contested in good faith and for which an adequate reserve or accrual has
been established in accordance with GAAP or (ii) those currently payable
without penalty or interest for which an adequate reserve or accrual has
been established or extensions duly paid. Except as described in the
Prospectus, the Company does not know of (A) any actual or proposed
material additional tax assessments or (B) any probable basis for the
imposition of any material additional tax assessments for any fiscal
period against the Company.
(v) KPMG Peat Marwick, the firm that examined and issued an
auditors' report with respect to the financial statements of the Company
included in the Prospectus, are independent public accountants within
the meaning of the Securities Act and the regulations thereunder.
(w) Neither BK Associates, Inc., Aircraft Information Services,
Inc. nor Morton Beyer and Associates (collectively, the "Appraisers") is
an affiliate of the Company or has a substantial interest, direct or
indirect, in the Company. To the Company's knowledge, none of the
officers and directors of any of such Appraisers are connected with the
Company or any of its affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
(x) To the best of the Company's knowledge, no event has
occurred and is continuing which constitutes a Lease Event of Default or
would constitute a Lease Event of Default under any Lease but for the
requirement that notice be given or time lapse or both.
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<PAGE> 9
(y) To the best of the Company's knowledge, no event has
occurred and is continuing which constitutes an Event of Loss (as
defined in each Lease) or would constitute an Event of Loss under any
Lease with the lapse of time.
(z) The Company is and will be the "issuer" within the meaning
of the Securities Act with respect to the offering and sale of the
Offered Certificates.
(aa) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(bb) As of the Closing Date, the Pass Through Trust Agreements
will have been duly qualified under the Trust Indenture Act, and the
rules and regulations promulgated thereunder, and comply as to form in
all material respects with the requirements of the Trust Indenture Act.
(cc) The Company has not and is not presently doing business
with the government of Cuba or with any person or affiliate located in
Cuba.
(dd) All of the Company's representations and warranties to be
contained in Section 8 of each Refunding Agreement, when made, shall be
incorporated by reference in this Agreement as if set forth herein, and
shall be true and correct on and as of the date they are made by the
Company pursuant to each Refunding Agreement and on and as of the
Closing Date.
3. Representations and Warranties of GPA. Each of GPA Group
plc ("GPA Group"), GPA Leasing USA I, Inc. ("GPA I") and GPA Leasing USA Sub I
("GPA Sub I" and, collectively with GPA Group and GPA I, "GPA") represents and
warrants to, and agrees with, the Underwriters and the Company on and as of the
date hereof and on and as of the Closing Date that:
(a) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-
effective amendment thereto shall become effective did not and will not
at any such time contain any untrue statement of a material fact or omit
to state any material fact with respect to the GPA Information (as
defined in Annex I hereto) required to be stated therein or necessary in
order to make the statements therein not misleading. The Prospectus on
the date hereof, at the time it is furnished to the Underwriters for
their use and on the Closing Date, did not and will not at any such time
contain an untrue statement of a material fact or omit to state a
material fact with respect to the GPA Information necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and
warranties made in this paragraph (a) shall not apply to any statements
or omissions made in reliance upon and in conformity with information
furnished by you in writing to the Company or GPA expressly for use in
the Registration Statement or the Prospectus nor to any statements or
omissions in that part of the Registration Statement that shall
constitute the Statement of Eligibility under the Trust Indenture Act on
Form T-1.
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<PAGE> 10
(b) GPA Group is a corporation duly organized and validly
existing under the laws of Ireland, with power and authority (corporate
and other) to own, lease and operate its properties and to conduct its
business as presently conducted and to enter into and perform its
obligations under this Agreement and the other Operative Documents to
which it is or will be a party.
(c) Each of GPA I and GPA Sub I is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Connecticut, with power and authority (corporate and other)
to own, lease and operate its properties and to conduct its business as
presently conducted and to enter into and perform its obligations under
this Agreement and the other Operative Documents to which it is or will
be a party.
(d) Except as described in the Form 20-F most recently filed by
GPA Group with the Commission (the "Form 20-F"), neither GPA Group, GPA
I nor GPA Sub I is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which it is a party or by which it may be bound or to which any of its
properties may be subject, except for such defaults that would not have
a material adverse effect on the condition (financial or otherwise), or
the earnings, business affairs, business prospects or properties of GPA
Group and its subsidiaries taken as a whole, or on the ability of GPA
Group, GPA I or GPA Sub I to perform their respective obligations under
this Agreement and the other Operative Documents to which GPA Group, GPA
I or GPA Sub I, as the case may be, is or will be a party or on the
consummation by GPA of the transactions contemplated herein or therein
(a "GPA Material Adverse Effect"). The execution, delivery and
performance of this Agreement and the other Operative Documents to which
GPA Group, GPA I or GPA Sub I is or will be a party and the consummation
by GPA of the transactions contemplated herein and therein have been
duly authorized by all necessary corporate action of GPA Group, GPA I
and GPA Sub I, as the case may be, do not require any stockholder
approval, or approval or consent of any trustee or holder of any
material indebtedness or material obligations of GPA Group, GPA I or GPA
Sub I, except such as have been duly obtained and are in full force and
effect, and will not result in any breach of any of the terms,
conditions or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of GPA Group, GPA I or GPA Sub I pursuant to any
indenture, loan agreement, contract or other instrument to which GPA
Group, GPA I or GPA Sub I is a party or by which GPA Group, GPA I or GPA
Sub I may be bound or to which any of the property or assets of GPA
Group, GPA I or GPA Sub I is subject, the failure of which to obtain or
which breach, default, lien, charge or encumbrance, individually or in
the aggregate, would have a GPA Material Adverse Effect, nor will any
such execution, delivery or performance result in any violation by GPA
of the provisions of the memorandum, articles of association,
certificate of incorporation or by-laws, as the case may be, of GPA
Group, GPA I or GPA Sub I or any statute, or any rule, regulation or
order of any governmental agency or body or any court having
jurisdiction over GPA Group, GPA I or GPA Sub I.
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<PAGE> 11
(e) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required to be
obtained or made by GPA for the valid authorization, execution and
delivery by GPA Group, GPA I or GPA Sub I of this Agreement and the
Operative Documents to which GPA Group, GPA I or GPA Sub I is or will be
a party and for the consummation by GPA of the transactions contemplated
herein and therein, except such as may be required under (i) the
Sections of the Aviation Act and filings or recordings with the FAA and
(ii) the Uniform Commercial Code as is in effect in the States of
Arizona and Connecticut and similar statutes as in effect in the country
of Ireland and filings thereunder, which filings listed in the preceding
clauses (i) and (ii) shall have been made, or duly presented for filing
on or prior to the Closing Date.
(f) Except as disclosed in the Form 20-F, there is no action,
suit or proceeding before or by any governmental agency or body or
court, domestic or foreign, now pending or, to the best knowledge of GPA
Group, GPA I or GPA Sub I, threatened against GPA Group, GPA I or GPA
Sub I or any of their respective properties that could reasonably be
expected to result in a GPA Material Adverse Effect.
(g) On or prior to the Closing Date, the issuance of the
Equipment Notes to be issued under each Indenture will be duly
authorized by the related Owner Trustee, and when duly executed and
delivered by the related Owner Trustee, and duly authenticated by the
related Indenture Trustee in accordance with the terms of such
Indenture, will be duly issued under such Indenture and will constitute
the valid and binding obligations of such Owner Trustee, and the holders
thereof will be entitled to the benefits of such Indenture, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
The offer and sale of the Equipment Notes will be exempt from the
registration requirements of the Act and it will not be necessary to
qualify any of the Indentures under the Trust Indenture Act in respect
of any such offer or sale.
(h) Neither GPA Group, GPA I nor GPA Sub I has taken any
corporate action or, to the best knowledge of GPA Group, GPA I and GPA
Sub I, have any other steps been taken or legal proceedings been started
or threatened against it (i) as a result of which it could become
bankrupt, (ii) for its winding-up, dissolution or reorganization or
(iii) for the appointment of a liquidator, receiver, administrator,
administrative receiver, examiner or similar officer of it or of any or
all its assets or revenues.
(i) This Agreement and the other Operative Documents to which
each of GPA Group, GPA I and GPA Sub I is a party have been duly
executed and delivered by each of GPA Group, GPA I and GPA Sub I, and
the other Operative Documents to which GPA Group, GPA I and GPA Sub I
will be a party will be duly executed and delivered by each of GPA
Group, GPA I and GPA Sub I on or prior to the Closing Date.
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<PAGE> 12
(j) The statements in the Prospectus describing various
provisions of the Pass Through Trust Agreements, the Offered
Certificates, the Intercreditor Agreement, the Liquidity Facilities, the
Equipment Notes, the Indentures and the other Operative Documents (other
than the Leases) provide accurate summaries of such provisions in all
material respects.
(k) The Operative Documents (other than this Agreement) to which
each of GPA Group, GPA I or GPA Sub I is or will be a party will
constitute, when duly executed and delivered by each of GPA Group, GPA I
or GPA Sub I, as the case may be, assuming that such Operative Documents
have been duly authorized, executed and delivered by, and constitute the
legal, valid and binding obligations of, each other party thereto, the
legal, valid and binding obligations of each of GPA Group, GPA I or GPA
Sub I, as the case may be, enforceable against each of GPA Group, GPA I
or GPA Sub I, as the case may be, in accordance with their terms, except
as enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereinafter in effect relating to creditors' rights generally and as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law), or (ii) with respect to indemnification and
contribution provisions, applicable law.
(l) To the best of GPA's knowledge, no event has occurred and is
continuing which constitutes a Lease Event of Default or would
constitute a Lease Event of Default under any Lease but for the
requirement that notice be given or time lapse or both.
(m) To the best of GPA's knowledge, no event has occurred and is
continuing which constitutes an Event of Loss (as defined in each Lease)
or would constitute an Event of Loss under any Lease with the lapse of
time.
(n) Neither GPA Group, GPA I, GPA Sub I nor any of the Trusts is
an "investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act; and
none of the Trusts, after giving effect to the offering and sale of the
Offered Certificates and the application of the proceeds thereof as
described in the Prospectus, will be an "investment company" as defined
in the Investment Company Act.
(o) All of GPA Group's, GPA I's and GPA Sub I's representations
and warranties to be contained in Section 9 of each Refunding Agreement,
when made, shall be incorporated by reference in this Agreement as if
set forth herein, and shall be true and correct on and as of the date
they are made by each of GPA Group, GPA I and GPA Sub I pursuant to each
Refunding Agreement and on and as of the Closing Date.
4. Purchase, Sale and Delivery of Offered Certificates.
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<PAGE> 13
(a) Subject to the terms and conditions set forth herein and in
reliance upon the representations and warranties herein contained, the
Company agrees to cause the Trustee to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from
each Trustee, at a purchase price of ___% of the principal amount
thereof, the aggregate principal amount of Offered Certificates of each
Trust set forth opposite the name of such Underwriter in Schedule I
hereto.
(b) The Company is advised by you that the Underwriters propose
to make a public offering of the Offered Certificates as soon after this
Agreement has been entered into as in your judgment is advisable. The
Company is further advised by you that the Offered Certificates are to
be offered to the public initially at 100% of their principal amount --
the public offering price -- plus accrued interest, if any, and to
certain dealers selected by the Underwriters at concessions not in
excess of the concessions set forth in the Prospectus, and that the
Underwriters may allow, and such dealers may reallow, concessions not in
excess of the concessions set forth in the Prospectus to certain other
dealers.
(c) As compensation to the Underwriters for their respective
commitments and obligations hereunder in respect of the Offered
Certificates, including their respective undertakings to distribute the
Offered Certificates, GPA I and GPA Sub I, jointly and severally, will
pay to each Underwriter with respect to the Offered Certificates of each
Trust purchased by it as set forth in Schedule I hereto a portion
determined by you and such Underwriter of the total amount of
commissions payable in respect of the Offered Certificates of each such
Trust as set forth in Schedule II hereto; provided that if GPA I or GPA
Sub I fails to pay such amounts when due, GPA Group will pay such
amounts. Such payment shall be made simultaneously with the payment by
the Underwriters to the Trustee of the purchase price of the Offered
Certificates as specified in Section 4(a) hereof. Payment of such
compensation shall be made by Federal funds check or other immediately
available funds.
(d) Delivery of and payment for the Offered Certificates shall
be made at the offices of Milbank, Tweed, Hadley & McCloy, 1 Chase
Manhattan Plaza, New York, New York 10005 at 10:00 A.M. on November __,
1996, you, GPA and the Company, collectively, having determined that it
is not feasible to close at an earlier date, or such other date, time
and place as may be agreed upon by you and the Company (such date and
time of delivery and payment for the Offered Certificates being herein
called the "Closing Date"). Delivery of the Offered Certificates shall
be made to your account at The Depository Trust Company for the
respective accounts of the several Underwriters against payment by the
Underwriters of the purchase price thereof to or upon the order of the
Trustee by wire transfer. The Offered Certificates shall be registered
in the name of Cede & Co. or in such other names, and in such
denominations as you may request in writing at least two full business
days in advance of the Closing Date.
(e) The Company agrees to have the Offered Certificates
available for inspection, checking and packaging by you in New York, New
York not later than 1:00 P.M. on the business day prior to the Closing
Date.
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<PAGE> 14
(f) It is understood that each Underwriter has authorized you
for its account, to accept delivery of, receipt for, and make payment of
the purchase price for, the Offered Certificates that it has agreed to
purchase. You, individually and not as a representative, may (but shall
not be obligated to) make payment of the purchase price for the Offered
Certificates to be purchased by any Underwriter whose check or checks
shall not have been received by the Closing Date.
5. Certain Agreements of the Company. The Company agrees
with each Underwriter that:
(a) The Company will advise you promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus and
will not effect such amendment or supplementation without your consent,
which consent will not be unreasonably withheld. If, at any time during
the period when a prospectus relating to the Offered Certificates is
required to be delivered by an Underwriter or a dealer under the Act any
event occurs as a result of which in the reasonable opinion of counsel
to the Underwriters or counsel to the Company the Registration Statement
or the Prospectus as then amended or supplemented would not comply with
applicable law or would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, the Company promptly will prepare, at the joint
and several expense of GPA I and GPA Sub I (or, alternatively, at the
expense of GPA Group), an amendment or supplement which, in the
reasonable opinion of counsel to the Underwriters or counsel to the
Company, will comply with such law or will correct such statement or
omission, will promptly file such amendment or supplement with the
Commission, and will furnish, at the joint and several expense of GPA I
and GPA Sub I (or, alternatively, at the expense of GPA Group), to the
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company), upon request, copies of the Prospectus as so
amended or supplemented. Neither your consent to, nor any Underwriter's
delivery to offerees or investors of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section
7.
(b) At the joint and several expense of GPA I and GPA Sub I (or,
alternatively, at the expense of GPA Group), the Company will furnish to
you one signed and as many conformed copies of each Registration
Statement (as originally filed) and of all amendments thereto, whether
filed before or after such Registration Statement became effective, as
many copies of all exhibits and documents filed therewith or
incorporated by reference therein and one signed and as many conformed
copies of all consents and certificates of experts as you may reasonably
request and, if requested by you, will furnish for each of the
Underwriters, one conformed copy of each Registration Statement (as
originally filed) and of each amendment thereto (including documents
incorporated by reference into the Prospectus but without exhibits).
(c) At the joint and several expense of GPA I and GPA Sub I (or,
alternatively, at the expense of GPA Group), the Company will furnish to
each
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<PAGE> 15
Underwriter copies of the Preliminary Prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as each Underwriter reasonably
requests. The Company will file the Prospectus pursuant to Rule 424(b)
under the Act within the time required under such Rule and the Act.
(d) The Company, at the joint and several expense of GPA I and
GPA Sub I (or, alternatively, at the expense of GPA Group), will take
such actions as may be reasonably requested by the Underwriters to
arrange for the qualification of the Offered Certificates for sale under
the applicable securities or Blue Sky laws of such jurisdictions in the
United States as the Underwriters reasonably designate and will continue
such qualifications in effect so long as required for the resale of the
Offered Certificates by the Underwriters; provided that the Company will
not be required to (i) qualify as a foreign corporation or as a dealer
in securities, (ii) file a general consent to service of process or
(iii) subject itself to taxation in any such state.
(e) The Company will as soon as practicable, but not later than
18 months after the effective date of the Registration Statement, make
generally available to its security holders and to you an earnings
statement of the Company and any subsidiaries conforming with the
requirements of Section 11(a) of the Act (including, at the option of
the Company, Rule 158 under the Act), covering a period of at least 12
months beginning on the first day of the first fiscal quarter of the
Company commencing after the later of (i) the effective date of the
Registration Statement, (ii) the effective date of the most recent
post-effective amendment to the Registration Statement to become
effective prior to the date of such acceptance and (iii) the date of the
Company's most recent Annual Report on Form 10-K filed with the
Commission.
(f) During the period of five years hereafter, the Company will
promptly furnish to you, and will make available to each of the other
Underwriters upon their request, copies of all of its annual reports,
quarterly reports and current reports on Forms 10-K, 10-Q and 8-K, or
such other forms as may be designated by the Commission, and any
definitive proxy statement of the Company, in each case, filed with the
Commission under the Exchange Act or mailed to stockholders.
(g) So long as any of the Offered Certificates are outstanding,
the Company will furnish to you, by first-class mail as soon as
practicable, (i) all documents distributed by the Company to any holders
of Offered Certificates, or filed with the Commission pursuant to the
Exchange Act, or any rule or regulation of the Commission thereunder,
(ii) any order of the Commission under the Act or the Exchange Act
received by the Company applicable to the Trusts or to the Company as
originator of the Trusts, or pursuant to a "no-action" letter obtained
from the staff of the Commission by the Company and affecting the Trusts
or the Company as originator of the Trusts and (iii) from time to time,
such other information concerning the Company or, to the extent
possessed by the Company, the Trusts as the Underwriters may reasonably
request.
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<PAGE> 16
(h) The Company will, during the period when a prospectus
relating to the Offered Certificates is required to be delivered by an
Underwriter or a dealer under the Act or the Exchange Act, file all
documents required to be filed with the Commission pursuant to Section
13, 14, or 15(d) of the Exchange Act within the required time periods.
You will notify the Company when such period shall have expired.
(i) The Company will notify you promptly after the Company
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Offered Certificates for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information and, in the event of the issuance of any stop
order or order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, at
the joint and several expense of GPA I and GPA Sub I (or, alternatively,
at the expense of GPA Group), promptly use reasonable efforts to obtain
its withdrawal.
(j) Between the date of this Agreement and the Closing Date, the
Company will not, without your prior written consent, offer, sell, or
enter into any agreement to sell, any public debt securities registered
under the Act (other than the Offered Certificates) or any debt
securities which may be resold in a transaction exempt from the
registration requirements of the Act in reliance on Rule 144A thereunder
and which are marketed through the use of a disclosure document
containing substantially the same information as a prospectus for
similar debt securities registered under the Act.
(k) In connection with the offering, until you shall have
notified the Company of the completion of the resale of the Offered
Certificates, neither the Company nor any of its affiliates has bid for
or purchased or will bid for or purchase, either alone or with one or
more other persons, for any account in which it or any of its affiliates
has a beneficial interest any Offered Certificates; and neither it nor
any of its affiliates will make bids or purchases for the purpose of
creating actual, or apparent, active trading in, or of raising the price
of, the Offered Certificates.
(l) To the extent, if any, that the ratings provided with
respect to the Offered Certificates by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Rating Services ("Standard & Poor's"
and, together with Moody's, the "Rating Agencies") are conditional upon
the furnishing of documents or the taking of any other actions by the
Company, the Company will, at the joint and several expense of GPA I and
GPA Sub I (or, alternatively, at the expense of GPA Group), furnish such
documents and take any such other actions in each case to the extent
reasonably practicable.
6. Certain Agreements of GPA. GPA agrees with the
Underwriters that:
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<PAGE> 17
(a) GPA I and GPA Sub I, jointly and severally, shall pay (or
cause to be paid), or if GPA I or GPA Sub I fails to pay, GPA Group
shall pay, the following (without duplication): (i) the preparation,
printing, distribution and filing of the registration statement
(including financial statements and exhibits), as originally filed and
amended, the Preliminary Prospectus, the Prospectus, and any amendments
thereof or supplements thereto, (ii) the preparation, printing and
distribution of this Agreement, the Pass Through Trust Agreements, the
Offered Certificates, the other Operative Documents and any Blue Sky
Memorandum or Legal Investment Survey by the Underwriters' counsel and
the reasonable fees and disbursements of Underwriters' counsel in
connection with such memorandum or survey, (iii) the delivery of the
Offered Certificates to the Underwriters, (iv) the reasonable fees and
disbursements of the Company's and GPA's counsel and the Company's
accountants, (v) the expenses of qualifying the Offered Certificates
under Blue Sky or state securities laws, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith, (vi) the fees and expenses of the Owner Trustees,
the Indenture Trustees, the Subordination Agent and the Trustees and the
reasonable fees and disbursements of their respective counsel, (vii) any
fees charged by the Rating Agencies for rating the Offered Certificates
(including annual surveillance fees related to the Offered Certificates
as long as they are outstanding), (viii) the reasonable fees and
disbursements of counsel for the Underwriters generally incurred in
connection with the consummation of the transactions contemplated by
this Agreement and the Operative Documents, (ix) any fees of the
National Association of Securities Dealers, Inc. in connection with
their review of the Underwriters' compensation; (xi) the costs and
charges of DTC and its nominee in connection with the Offered
Certificates, including the book-entry ownership system for the Offered
Certificates, (xi) all reasonable travel, lodging and other expenses of
the Underwriters and the Company's officers and employees and any other
expenses in connection with attending or hosting meetings with
prospective purchasers of Offered Certificates, (xii) all fees and
expenses relating to appraisals of each of the Aircraft and each Spare
Engine, and (xiv) all expenses specified in Section 21 of each Refunding
Agreement.
If this Agreement is terminated by the Underwriters in accordance
with the provisions of Section 11, GPA shall reimburse the Underwriters
for all their reasonable out-of-pocket expenses.
(b) To the extent, if any, that the ratings provided with
respect to the Offered Certificates by any Rating Agency are conditional
upon the furnishing of documents or the taking of any other actions by
GPA, GPA will furnish such documents and take any such other actions in
each case to the extent reasonably practicable.
7. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters hereunder shall be subject to (i) the condition
that all representations and warranties and other statements of the Company and
GPA set forth or incorporated by reference herein and made in certificates
furnished pursuant hereto, and of each party to the Operative Documents, made
in such documents, are, at and as of the Closing Date, true and correct, (ii)
the condition that the Company and GPA shall have performed in all material
respects all of their respective obligations hereunder theretofore to be
performed, (iii) the
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<PAGE> 18
condition that each of the Indenture Documents related to each of the Owner
Trusts constitutes the legal, valid and binding agreements of the parties
thereto, (iv) the condition that no Lease Event of Default under any Lease or
event or condition which with the passage of time or the giving of notice or
both would become a Lease Event of Default under any Lease shall have occurred,
and (v) the condition that none of the Japanese Financing Documents have been
repudiated by any party thereto or otherwise have ceased to be in full force
and effect, and to the following additional conditions precedent:
(a) Subsequent to the date of this Agreement and on or prior to
the Closing Date,
(i) no stop order suspending the effectiveness of either
Registration Statement shall have been issued under the Act and
no proceedings therefor shall have been instituted or threatened
by the Commission.
(ii) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded any of the Company's securities by the Rating Agencies
or any other "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule
436(g)(2) under the Act; and
(iii) (A) the Company shall not have sustained, since the
date of the interim financial statements included in the
Prospectus, any material loss or interference with its business
from any court or governmental action, order or decree, other
than as set forth or contemplated in the Prospectus and (B) since
such date there shall not have occurred any change, or any
development involving a prospective change, in or affecting the
condition (financial or otherwise), or the earnings, business
affairs, business prospects or properties of the Company that,
individually or in the aggregate, other than as set forth or
contemplated in the Prospectus, the effect of which, in any such
case described in clause (A) or clause (B), is material and
adverse and that makes it, in your judgment, impracticable or
inadvisable to market the Offered Certificates on the terms and
in the manner contemplated in the Prospectus.
(iv) since the date of the Prospectus there shall not
have occurred any change or development which would reasonably be
expected to result in a prospective change in or affecting the
condition (financial or otherwise), or the earnings, business
affairs, business prospects or properties of GPA and its
subsidiaries taken as a whole, that, individually or in the
aggregate, other than as set forth or contemplated in the Form
20-F, the effect of which is material and adverse and that makes
it, in your judgment, impracticable or inadvisable to market the
Offered Certificates on the terms and in the manner contemplated
in the Prospectus.
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(b) You shall have received a letter, dated the date of this
Agreement, from each of KPMG Peat Marwick LLP and Babcock & Brown in
form and substance reasonably satisfactory to you.
(c) On the Closing Date, you shall have received:
(1) The favorable opinions, dated as of the Closing Date,
of Andrews & Kurth L.L.P., and Latham & Watkins, counsel for the
Company, in form and substance reasonably satisfactory to you.
(2) The favorable opinion, dated as of the Closing Date,
of Stephen L. Johnson, Senior Vice President - Legal Affairs, of
the Company, in form and substance reasonably satisfactory to
you.
(3) The favorable opinion, dated as of the Closing Date,
of Paul, Hastings, Janofsky & Walker LLP, counsel for GPA Group,
GPA I and GPA Sub I, in form and substance reasonably
satisfactory to you.
(4) The favorable opinion, dated as of the Closing Date,
of McCann FitzGerald, Irish counsel for GPA Group, in form and
substance reasonably satisfactory to you.
(5) The favorable opinions, dated as of the Closing Date,
of ______ __________, and ___________________________, each
counsel for an Owner Participant in form and substance reasonably
satisfactory to you.
(6) The favorable opinions, dated as of the Closing Date
of the general counsel or assistant general counsel for
_____________________ ___________ and
____________________________, respectively, as Owner
Participants, in form and substance reasonably satisfactory to
you.
(7) The favorable opinions, dated as of the Closing Date,
of Nakagawa & Takashina, counsel for FUYO General Lease Co.,
Ltd., and Nishimura & Partners, counsel to Air Tara Caymans I,
Limited and Air Tara Caymans II, Limited in form and substance
reasonably satisfactory to you.
(8) The favorable opinions, dated as of the Closing Date,
of Kelley, Drye & Warren and Shipman & Goodwin LLP, counsel for
the Chase Manhattan Bank and Fleet National Bank, respectively,
as Indenture Trustees, in form and substance reasonably
satisfactory to you.
(9) The favorable opinions, dated as of the Closing Date,
of Morris, James, Hitchens & Williams, counsel for Wilmington
Trust Company, as Owner Trustee, in form and substance reasonably
satisfactory to you.
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<PAGE> 20
(10) The favorable opinion, dated as of the Closing Date,
of Shipman & Goodwin LLP, counsel for Fleet National Bank as Pass
Through Trustee under each Trust, in form and substance
reasonably satisfactory to you.
(11) The favorable opinion, dated as of the Closing Date,
of Shipman & Goodwin LLP, counsel for Fleet National Bank as
Subordination Agent, in form and substance reasonably
satisfactory to you.
(12) The favorable opinion, dated as of the Closing Date,
of White & Case, counsel for Kredietbank N.V., acting through its
New York Branch, as Liquidity Provider, in form and substance
reasonably satisfactory to you.
(13) The favorable opinion, dated as of the Closing Date,
of Wilfried Kupers, Senior Legal Advisor for Kredietbank N.V.,
acting through its New York branch, as Liquidity Provider, in
form and substance reasonably satisfactory to you.
(14) The favorable opinion, dated as of the Closing Date,
of Daugherty, Fowler & Peregrin, special FAA counsel, in form and
substance reasonably satisfactory to you.
(15) The favorable opinion, dated as of the Closing Date,
of Milbank, Tweed, Hadley & McCloy, your special counsel, with
respect to Section 1110 of the Bankruptcy Code, in form and
substance reasonably satisfactory to you.
(16) The favorable opinion, dated as of the Closing Date,
of Milbank, Tweed, Hadley & McCloy, your special counsel, with
respect to the validity of the Offered Certificates, the
Prospectus, and other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(d) Each of the Appraisers shall have furnished to you a letter
from such Appraiser, addressed to the Company and dated the Closing
Date, confirming that such Appraiser and each of its directors and
officers (i) is not an affiliate of the Company or any of its
affiliates, (ii) does not have any substantial interest, direct or
indirect, in the Company or any of its affiliates and (iii) is not
connected with the Company or any of its affiliates as an officer,
employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
(e) You shall have received a certificate, dated the Closing
Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers shall state
that, to the best of their knowledge after reasonable investigation, the
representations and warranties of the Company in this Agreement are true
and correct on and as of the Closing Date as if made on the Closing
Date, that the Company has complied with all agreements and satisfied
all
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<PAGE> 21
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, and that, subsequent to the dates of the
Company's most recent interim financial statements there has been no
Material Adverse Change, except as set forth in or contemplated by the
Prospectus.
(f) You shall have received a certificate, dated the Closing
Date, of any authorized officer of each of GPA Group, GPA I and GPA Sub
I in which such officers shall state that, to the best of their
knowledge after reasonable investigation, the representations and
warranties of each of GPA Group, GPA I and GPA Sub I in this Agreement
are true and correct on and as of the Closing Date as if made on the
Closing Date, and that each of GPA Group, GPA I and GPA Sub I has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date.
(g) You shall have received a letter, dated the Closing Date, of
KPMG Peat Marwick LLP which meets the requirements of subsection (b) of
this Section 7.
(h) At the Closing Date, each of the Operative Documents shall
have been duly executed and delivered by each of the parties thereto;
the representations and warranties of the Company contained in each of
the Operative Documents to which it is a party shall be true and correct
as of the Closing Date (except to the extent that they relate solely to
an earlier date in which case they shall be true and correct as of such
earlier date) and you shall have received a certificate of a Vice
President of the Company, dated as of the Closing Date, to such effect.
GPA agrees to furnish to you, promptly after the Closing Date, a copy of
each opinion required to be delivered under the applicable Operative
Document addressed to you and of such other documents furnished in
connection with the fulfillment of the conditions precedent therein as
you or your counsel may reasonably request.
(i) Each of the Company and GPA shall have furnished or caused
to be furnished to you prior to or at the Closing Date, in form and
substance satisfactory to you and your counsel, such other information,
documents, certificates and opinions as the you, your counsel, or the
Rating Agencies may reasonably request.
(j) On the Closing Date, the Class A Certificates shall be rated
A2 by Moody's and AA- by Standard & Poor's, the Class B Certificates
shall be rated Baa2 by Moody's and A- by Standard & Poor's, the Class C
Certificates shall be rated Ba1 by Moody's and BBB- by Standard &
Poor's, the Class D Certificates shall be rated Ba3 by Moody's and BB by
Standard & Poor's, and the Class E Certificates shall be rated B1 by
Moody's and B+ by Standard & Poor's.
(k) On or prior to the Closing Date, the conditions precedent
set forth in Section 3 of each Refunding Agreement shall have been
fulfilled to the satisfaction of the Underwriters.
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<PAGE> 22
The Company will furnish you with such conformed copies of such
agreements, opinions, certificates, letters and documents as you reasonably
request. You may waive compliance with any conditions to your obligations
hereunder.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, and each Person, if any, who controls such Underwriter within the
meaning of either Section 15 of the Act, or Section 20 of the Exchange Act, or
is under common control with any Underwriter, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling or affiliated person in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the America West Information included
in the Registration Statement (as amended if any amendments thereto shall have
been prepared), or caused by any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or caused by any untrue statement or alleged
untrue statement of a material fact contained in the America West Information
included in the Preliminary Prospectus or the Prospectus (as amended or
supplemented, if any amendments or supplements thereto shall have been
prepared), or caused by any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that the Company shall not be liable in any such case to the extent
that any such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing by you on behalf
of such Underwriter expressly for use therein; provided, further, that the
Company shall not be liable in any such case to the extent that any such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon the GPA
Information or the Statement of Eligibility under the Trust Indenture Act on
Form T-1 filed as part of the Registration Statement; provided, further, that
with respect to any untrue statement or omission or alleged untrue statement or
omission in any Prospectus such indemnity with respect to such Prospectus shall
not inure to the benefit of any Underwriter (or any person controlling or under
common control with such Underwriter) from whom the Person asserting any such
loss, claim, damage or liability purchased the Offered Certificates which are
the subject thereof if such untrue statement or omission or alleged untrue
statement or omission was remedied or eliminated in a subsequent Prospectus and
if such Underwriter failed to deliver a copy of such subsequent Prospectus to
such Person prior to or together with written confirmation of the sale of
Offered Certificates to such Person, unless such failure to deliver the
Prospectus was a result of noncompliance by the Company with the delivery
requirements set forth in Section 5 hereof.
(b) The GPA Group, GPA I and GPA Sub I, jointly and severally,
agree to indemnify and hold harmless, each Underwriter, and each Person, if
any, who controls such Underwriter within the meaning of either Section 15 of
the Act, or Section 20 of the Exchange Act, or is under common control with any
Underwriter, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by the Company, any Underwriter or any such controlling or
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<PAGE> 23
affiliated person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the GPA Information included in the Registration
Statement (as amended if any amendments thereto shall have been prepared), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of a
material fact contained in the GPA Information included in the Preliminary
Prospectus or the Prospectus (as amended or supplemented if any amendments or
supplements thereto shall have been prepared), or caused by any omission or
alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that GPA shall not be liable in any
such case to the extent that any such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Underwriter furnished in
writing by you on behalf of such Underwriter expressly for use therein;
provided, further, that GPA shall not be liable in any such case to the extent
that any such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
the America West Information; provided, further, that with respect to any
untrue statement or omission or alleged untrue statement or omission in any
Prospectus such indemnity with respect to such Prospectus shall not inure to
the benefit of any Underwriter (or any person controlling or under common
control with such Underwriter) from whom the Person asserting any such loss,
claim, damage or liability purchased the Offered Certificates which are the
subject thereof if such untrue statement or omission or alleged untrue
statement or omission was remedied or eliminated in a subsequent Prospectus and
if such Underwriter failed to deliver a copy of such subsequent Prospectus to
such Person prior to or together with written confirmation of the sale of
Offered Certificates to such Person, unless such failure to deliver the
Prospectus was a result of noncompliance by the Company with the delivery
requirements set forth in Section 5 hereof.
(c) The Underwriters agree to indemnify and hold harmless the
Company, the GPA Group, GPA I and GPA Sub I, each of their directors, each of
their officers who signed the Registration Statement and each Person, if any,
who controls the Company, the GPA Group, GPA I or GPA Sub I within the meaning
of either Section 15 of the Act or Section 20 of the Exchange Act, or is under
common control with the Company, the GPA Group, GPA I or GPA Sub I, to the same
extent as the foregoing indemnities from the Company, the GPA Group, GPA I and
GPA Sub I to the Underwriters, but only with reference to information relating
to the Underwriters furnished in writing by you on behalf of the Underwriters
expressly for use in the Registration Statement, the Preliminary Prospectus or
the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraphs (a), (b) or (c) above, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding
and shall pay the fees and
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<PAGE> 24
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by you on behalf
of the Underwriters, in the case of parties indemnified pursuant to paragraphs
(a) or (b) above, and by the Company, the GPA Group, GPA I or GPA Sub I, as the
case may be, in the case of parties indemnified pursuant to paragraph (c)
above; provided, however, that if the indemnified parties consist of the
Company, the GPA Group, GPA I or GPA Sub I, each such indemnified party shall
have the right to select its own counsel in the circumstances described in
clauses (i) and (ii) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment to the
extent provided herein. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in paragraph
(a), (b) or (c) of this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by (A) the Company and GPA collectively on the one
hand, and (B) the Underwriters collectively on the other hand, from the
offering of the Offered Certificates or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of (A) the Company, (B) GPA, and (C) the
Underwriters, in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
GPA collectively in connection with the offering of the Offered Certificates
shall be deemed to be in the same proportion as the net proceeds from the
offering of the Offered Certificates (after deducting the aggregate
underwriting commissions received by the Underwriters but before deducting
other fees and expenses) received by the Trustees in respect thereof, as set
forth in the Prospectus, bears to the aggregate public offering price of such
Offered Certificates. The relative benefits received by the Underwriters
collectively in
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<PAGE> 25
connection with the offering of the Offered Certificates shall be deemed to be
in the same proportion as the aggregate underwriting commissions received by
the Underwriters in respect thereof, as set forth in the Prospectus, bears to
the aggregate public offering price of the Offered Certificates. The relative
fault of the Company, GPA or the Underwriters shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by (a) the Company, (b) GPA, or (c) the
Underwriters, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of the preceding sentence, the Company shall be deemed to have
supplied the America West Information, GPA shall be deemed to have supplied the
GPA Information and the Underwriters shall be deemed to have supplied the
information concerning the Underwriters described in paragraph (c) of this
Section 8.
(f) The Company, GPA and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(e) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in paragraph (e) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Certificates underwritten by it and distributed to
the public were offered to investors exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(g) The indemnity and contribution provisions contained in this
Section 8 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of or the Company, the GPA Group, GPA I or GPA Sub I, their respective officers
or directors or any person controlling the Company, the GPA Group, GPA I or GPA
Sub I and (iii) acceptance of and payment for any of the Offered Certificates.
The remedies provided for in this Section 8 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
9. Default of Underwriters. If, on the Closing Date any one or
more of the Underwriters shall fail or refuse to purchase Offered Certificates
that it has or they have agreed to purchase hereunder on such date, and the
aggregate principal amount of Offered Certificates which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed 10% of the aggregate principal amount of the Offered Certificates to be
purchased on such date, the other Underwriters shall be obligated severally in
the proportions that the principal amount of Offered Certificates specified to
be purchased by them in Schedule I bears to the aggregate principal amount of
Offered Certificates specified to
25
<PAGE> 26
be purchased by all such non-defaulting Underwriters, or in such other
proportions as you may specify, to purchase the Offered Certificates which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall principal amount of Offered
Certificates that any Underwriter has agreed to purchase pursuant to Section 4
be increased pursuant to this Section 9 by an amount in excess of one-ninth of
such principal amount of Offered Certificates without the written consent of
such Underwriter. If on the Closing Date any Underwriter or Underwriters shall
fail or refuse to purchase Offered Certificates and the aggregate principal
amount of Offered Certificates with respect to which such default occurs is
more than 10% of the aggregate principal amount of Offered Certificates to be
purchased on such date, and arrangements satisfactory to you and the Company
for the purchase of such Offered Certificates are not made within 36 hours
after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter, GPA or the Company, except that GPA
will continue to be liable for the payment of expenses to the extent set forth
in Section 6, but only with respect to the non-defaulting Underwriters and the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements that may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of GPA or the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason GPA or the Company shall be unable to perform its obligations
under this Agreement, GPA will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the reasonable fees and disbursements of
their counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
10. Survival of Certain Agreements, Etc. and Certain
Reimbursement Obligations. The respective agreements, covenants,
representations, warranties and other statements of the Company or GPA or of
their respective officers and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter, GPA or the Company or any of their respective representatives,
officers or directors or any controlling person and will survive delivery of
and payment for the Offered Certificates. If for any reason the purchase of
the Offered Certificates by the Underwriters is not consummated, GPA shall be
responsible for all of the expenses to be paid or reimbursed pursuant to
Section 6, and the obligations of GPA and the Company and the Underwriters
pursuant to Section 8 shall remain in effect. If the purchase of the Offered
Certificates by the Underwriters is not consummated for any reason other than
solely because of the occurrence of the termination of the Agreement pursuant
to Section 9 or Section 11, GPA shall reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
reasonably incurred by it in connection with the offering of such Offered
Certificates and comply with its obligations under Section 6.
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<PAGE> 27
11. Termination. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of
any securities of the Company shall have been suspended on any exchange or in
any over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clause (a), such event singly or together with any
other such event makes it, in your judgment, impracticable or inadvisable to
market the Offered Certificates on the terms and in the manner contemplated in
the Prospectus.
12. Notices. All communications hereunder will be in writing
and will be mailed, delivered or sent by facsimile transmission and confirmed
(a) if to the Underwriters, Morgan Stanley & Co. Incorporated, at 1585
Broadway, New York, New York 10036, Attention: Equipment Finance Group,
facsimile number 212- 761-0786; (b) if to the Company, at 4000 East Sky Harbor
Boulevard, Phoenix, Arizona 85034, Attention: Senior Vice President-Legal
Affairs, facsimile number 602-693-5904; (c) if to GPA Group, GPA Group plc, 4th
Floor, GPA House, Shannon, Co. Clare, Ireland, Attention: Company Secretary,
facsimile number 353-61-360503; (d) if to GPA I or GPA Sub I, GPA Leasing USA
I, Inc. or GPA Leasing USA Sub I, Inc., at 83 Wooster Heights Road, Danbury,
Connecticut 06810, Attention: President, facsimile number 203-830-4764.
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 8, and no other person will have any
right or obligation hereunder.
14. Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. APPLICABLE 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.
16. Submission to Jurisdiction; Appointment of Agent for
Service; Obligation Currency. Any suit, action or proceeding against any party
to this Agreement arising out of or relating to this Agreement, any transaction
contemplated hereby or any judgment entered by any court in respect thereof may
be brought in any New York State court located in the County of New York or
Federal court sitting in the Second Circuit, and each such party hereby submits
to the nonexclusive jurisdiction of such courts for the purpose of any such
suit, action or proceeding. To the extent that service of process by mail is
permitted by applicable law, each party hereto irrevocably consents to the
service of process in any such suit, action or proceeding in such courts by the
mailing of such process by
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<PAGE> 28
registered or certified mail, postage prepaid, at its address for notices
provided for above. Each party to this Agreement irrevocably agrees not to
assert any objection which it may ever have to the laying of venue of any such
suit, action or proceeding in any New York State court located in the County of
New York or Federal court sitting in the Second Circuit, or any claim that any
such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum. To the fullest extent permitted by applicable law, each
party to this Agreement waives any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement. The Company irrevocably designates and
appoints CT Corporation System, 1633 Broadway, New York, NY 10019, and GPA
Group, GPA I and GPA Sub I each irrevocably designates and appoints Paul,
Hastings, Janofsky & Walker LLP, 399 Park Avenue, New York, New York 10022,
Attention: John P. Howitt and Leigh Ryan, (collectively, the "Process
Agents"), as the authorized agents of the Company, GPA Group and GPA I and GPA
Sub I, respectively, upon whom process may be served in any such suit, action
or proceeding, it being understood that the designation and appointment of the
Process Agents as such authorized agent shall become effective immediately
without any further action on the part of the Company, GPA Group, GPA I or GPA
Sub I. Each of the Company, GPA Group, GPA I and GPA Sub I represents to the
Underwriters that it has notified its Process Agent of such designation and
appointment and that such Process Agent has accepted the same in writing. Each
of the Company, GPA Group, GPA I and GPA Sub I hereby irrevocably authorizes
and directs its Process Agent to accept such service. Each of the Company, GPA
Group, GPA I and GPA Sub I further agrees that service of process upon its
Process Agent and written notice of said service to the Company, GPA Group, GPA
I or GPA Sub I, as the case may be, mailed by first class mail or delivered to
such Process Agent, shall be deemed in every respect effective service of
process upon the Company, GPA Group, GPA I or GPA Sub I, as the case may be, in
any such suit, action or proceeding. Nothing herein shall affect the right of
any Underwriter or any person controlling such Underwriter to serve process in
any other manner permitted by law. Each of the Company, GPA Group, GPA I and
GPA Sub I agrees that a final action in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other lawful manner. If the Company, GPA Group, GPA I or GPA Sub I,
as the case may be, has or may hereafter acquire immunity from jurisdiction or
legal process or from attachment in aid of execution or from execution with
respect to itself or its property, the Company, GPA Group, GPA I or GPA Sub I,
as the case may be, hereby irrevocably waives to the fullest extent permitted
under applicable law such immunity in respect of its obligations hereunder in
any action, suit or proceeding which may be instituted in any New York State
court located in the County of New York or Federal court sitting in the Second
Circuit by any Underwriter or by any persons controlling such Underwriter
within the meaning of Section 15 of the Securities Act or any director,
officer, employee or agent of such Underwriter. This waiver is intended to be
effective upon the execution of this Agreement without any further act by the
Company, GPA Group, GPA I or GPA Sub I, as the case may be, before any such
court, and the introduction of a true copy of this Agreement into evidence in
any such court shall, to the fullest extent permitted by applicable law, be
conclusive and final evidence of such waiver.
28
<PAGE> 29
The obligation of the parties hereto to make payments hereunder
is in U.S. dollars (the "Obligation Currency") and such obligation shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any currency other than the Obligation Currency
or any other realization in such other currency, whether as proceeds of
set-off, security, guarantee, distributions, or otherwise, except to the extent
to which such tender, recovery or realization shall result in the effective
receipt by the party which is to receive such payment of the full amount of the
Obligation Currency expressed to be payable hereunder.
--------------------
29
<PAGE> 30
If the foregoing is in accordance with the Underwriters'
understanding of our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument will become a binding agreement
among the Underwriters, the Company, GPA Group, GPA I and GPA Sub I in
accordance with its terms.
Very truly yours,
AMERICA WEST AIRLINES, INC.
By:
------------------------------------
Name:
Title:
GPA GROUP PLC
By:
------------------------------------
Name:
Title:
GPA LEASING USA I, INC.
By:
------------------------------------
Name:
Title:
GPA LEASING USA SUB I, INC.
By:
------------------------------------
Name:
Title:
Accepted as of the date first above written:
Morgan Stanley & Co. Incorporated; Citicorp
Securities, Inc.; Lehman Brothers Inc.; and
Salomon Brothers Inc
By: MORGAN STANLEY & CO.
INCORPORATED
By:
----------------------------------
Name:
Title:
30
<PAGE> 31
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount Principal Amount
of Pass Through of Pass Through of Pass Through of Pass Through of Pass Through
Certificates of Certificates of Certificates of Certificates of Certificates of
the Class A Trust the Class B Trust the Class C Trust the Class D Trust the Class E Trust
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Morgan Stanley &
Co. Incorporated
Citicorp Securities, Inc.
Lehman Brothers Inc.
Salomon Brothers Inc
TOTAL
</TABLE>
<PAGE> 32
SCHEDULE II
<TABLE>
<CAPTION>
Pass Through Aggregate
Certificate Principal Interest Final
Designation Amount Rate Distribution Date Commissions* Commissions**
----------- ------ ---- ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
1996-1A $ % % $
1996-1B
1996-1C
1996-1D
1996-1E
------------
Total
============
</TABLE>
- ---------------
* Expressed as a percentage of Aggregate Principal Amount.
** Expressed in dollars.
<PAGE> 33
ANNEX 1
For purposes of the Underwriting Agreement, "America West
Information" shall consist of the following information in the Registration
Statement and the Prospectus:
(a) The cover page of the Registration Statement.
(b) The table on the cover page of the Prospectus, including
the footnote thereto relating to accrued interest and the first sentence of the
footnote immediately following such footnote.
(c) The information in the last two paragraphs on page 2 of
the Prospectus.
(d) The information under the heading "Available Information
and Reports to Certificateholders."
(e) The information under the heading "Forward Looking
Information."
(f) The information under the heading "Incorporation of
Certain Documents by Reference."
(g) The information under the headings "Prospectus
Summary--The Company," "--Strategy," "--The Offering--Equipment Notes--(e)
Section 1110 Protection," "--Federal Income Tax Consequences,""--ERISA
Considerations" and "-- Summary Financial and Operating Data".
(h) The information under the headings "Risk Factors--Company
Related Risks" and "--Industry Related Risks."
(i) The information under the headings "Risk Factors-Factors
Relating to the Certificates and the Offering--Maintenance," "--Insurance", "--
Repossession" and "--Absence of a Public Market for the Certificates."
(j) The information under the headings "Ratio of Earnings to
Fixed Charges," "Capitalization," "Selected Financial and Operating Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," "Management" and "Certain Transactions."
(k) The second full paragraph under the heading "Description
of the Equipment Notes--General."
(l) The fifth, sixth and seventh paragraphs under the heading
"Description of the Equipment Notes--Remedies."
(m) The information under the heading "Description of the
Equipment Notes--Modification of Indentures and Leases" and
"--Indemnification," but only to the extent such information thereunder
concerns the Leases and not the Indentures.
(n) The information under the heading "Description of the
Equipment Notes--The Leases."
(o) The information under the headings "Certain U.S. Federal
Income Tax Consequences," "State Tax Considerations," "ERISA Considerations,"
"Underwriting" and "Legal Matters."
(p) The information under the first two paragraphs under the
heading "Experts."
(q) The information under the headings "Index to Financial
Statements," including the condensed financial statements of the Company, the
financial statements of the Company and the "Independent Auditors' Report" that
follow such index.
<PAGE> 34
(r) All annual, quarterly and other reports, exhibits and
other documents incorporated by reference in the Registration Statement and the
Prospectus.
(s) The information included in Part II of the Registration
Statement.
For purposes of the Underwriting Agreement, "GPA Information" shall
consist of all of the information in the Registration Statement and the
Prospectus other than the America West Information.
2
<PAGE> 1
Exhibit 4.6
AMERICA WEST AIRLINES, INC.
and
FLEET NATIONAL BANK,
as Trustee
PASS THROUGH TRUST AGREEMENT
Dated as of November __, 1996
<PAGE> 2
Reconciliation and tie between Pass Through Trust Agreement dated as of
November __, 1996 and the Trust Indenture Act of 1939. This reconciliation
does not constitute part of the Pass Through Trust Agreement.
<TABLE>
<CAPTION>
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
------------------- ------------------
<S> <C>
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
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
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 ............................................... 20
Section 3.01. Form, Denomination and Execution of
Certificates ............................. 20
Section 3.02. Authentication of Certificates ............. 21
Section 3.03. Temporary Certificates ..................... 21
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 ...................... 23
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 ................ 26
Section 4.01. Certificate Account and Special Payments
Account ................................... 26
Section 4.02. Distributions from Certificate Account
and Special Payments Account .............. 27
Section 4.03. Statements to Certificateholders ............ 28
Section 4.04. Investment of Special Payment Moneys ........ 29
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
THE COMPANY ............................................................. 29
Section 5.01. Maintenance of Corporate Existence ..................... 29
Section 5.02. Consolidation, Merger, Etc ............................. 30
ARTICLE VI
DEFAULT ................................................................. 31
Section 6.01. Events of Default ...................................... 31
Section 6.02. Incidents of Sale of Equipment Notes ................... 32
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit ...................... 33
Section 6.04. Control by Certificateholders .......................... 33
Section 6.05. Waiver of Past Defaults ................................ 34
Section 6.06. Right of Certificateholders to Receive
Payments Not To Be Impaired .......................... 34
Section 6.07. Certificateholders May Not Bring Suit
Except Under Certain Conditions ...................... 35
Section 6.08. Remedies Cumulative .................................... 35
Section 6.09. Undertaking for Costs .................................. 36
ARTICLE VII
THE TRUSTEE ............................................................. 36
Section 7.01. Notice of Defaults ..................................... 36
Section 7.02. Certain Rights of Trustee .............................. 36
Section 7.03. Not Responsible for Recitals or Issuance
of Certificates ...................................... 38
Section 7.04. May Hold Certificates .................................. 38
Section 7.05. Money Held in Trust .................................... 38
Section 7.06. Compensation and Reimbursement ......................... 38
Section 7.07. Corporate Trustee Required; Eligibility ................ 40
Section 7.08. Resignation and Removal; Appointment of Successor ...... 40
Section 7.09. Acceptance of Appointment by Successor ................. 42
Section 7.10. Merger, Conversion, Consolidation or
Succession to Business ............................... 43
Section 7.11. Maintenance of Agencies ................................ 43
Section 7.12. Money for Certificate Payments to Be Held in Trust ..... 45
Section 7.13. Registration of Equipment Notes in Trustee's Name ...... 45
Section 7.14. Representations and Warranties of Trustee .............. 45
Section 7.15. Withholding Taxes; Information Reporting ............... 46
Section 7.16. Trustee's Liens ........................................ 47
Section 7.17. Preferential Collection of Claims ...................... 47
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE ................ 47
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of
Certificateholders ......................... 47
Section 8.02. Preservation of Information;
Communications to Certificateholders ....... 47
Section 8.03. Reports by Trustee ........................... 48
Section 8.04. Reports by the Company ....................... 48
ARTICLE IX
SUPPLEMENTAL AGREEMENTS .......................................... 49
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders ...................... 49
Section 9.02. Supplemental Agreements with Consent of
Certificateholders ......................... 50
Section 9.03. Documents Affecting Immunity or
Indemnity .................................. 51
Section 9.04. Execution of Supplemental Agreements ......... 51
Section 9.05. Effect of Supplemental Agreements ............ 52
Section 9.06. Conformity with Trust Indenture Act .......... 52
Section 9.07. Reference in Certificates to
Supplemental Agreements .................... 52
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS ....................... 52
Section 10.01. Amendments and Supplements to Indenture
and Other Note Documents .................. 52
ARTICLE XI
TERMINATION OF TRUSTS ............................................ 53
Section 11.01. Termination of the Trusts ................... 53
ARTICLE XII
MISCELLANEOUS PROVISIONS ......................................... 54
Section 12.01. Limitation on Rights of
Certificateholders ........................ 54
Section 12.02. Liabilities of Certificateholders ........... 54
Section 12.03. Certificates Nonassessable and Fully
Paid ...................................... 54
Section 12.04. Registration of Equipment Notes in Name
of Subordination Agent .................... 55
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 12.05. Notices ....................................... 55
Section 12.06. Governing Law ................................. 56
Section 12.07. Severability of Provisions .................... 56
Section 12.08. Trust Indenture Act Controls .................. 56
Section 12.09. Effect of Headings and Table of
Contents .................................... 56
Section 12.10. Successors and Assigns ........................ 57
Section 12.11. Benefits of Agreement ......................... 57
Section 12.12. Legal Holidays ................................ 57
Section 12.13. Counterparts .................................. 57
Section 12.14. Communication by Certificateholders
with Other Certificateholders ............... 57
Section 12.15. Intention of Parties........................... 57
Exhibit A - Form of Certificate
</TABLE>
<PAGE> 7
This PASS THROUGH TRUST AGREEMENT, dated as of November __, 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 a beneficial interest in the Certificates of such series, 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
5
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
6
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
8
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 Cut-off 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,
means any failure to pay within 10 Business Days of the due date thereof: (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.
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
<PAGE> 15
9
(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 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.
<PAGE> 16
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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 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
<PAGE> 17
11
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.
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.
<PAGE> 18
12
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.
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.
<PAGE> 19
13
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 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
<PAGE> 20
14
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 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
<PAGE> 21
15
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> 22
16
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> 23
17
(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> 24
18
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> 25
19
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> 26
20
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> 27
21
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> 28
22
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> 29
23
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> 30
24
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> 31
25
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> 32
26
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> 33
27
(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> 34
28
(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> 35
29
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> 36
30
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> 37
31
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> 38
32
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, 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 and dispose of such Equipment Notes in their own absolute
right without further accountability.
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(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 Rent (as defined in the relevant Lease) under
any Lease 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 Lease 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,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the
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34
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 Regular Distribution Date or
Special Distribution Date, shall not
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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.
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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
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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
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(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 Certificates.
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),
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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
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(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> 47
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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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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;
<PAGE> 52
46
(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
<PAGE> 53
47
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
<PAGE> 54
48
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
<PAGE> 55
49
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
<PAGE> 56
50
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 Certificateholders 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
<PAGE> 57
51
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.
<PAGE> 58
52
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
<PAGE> 59
53
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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54
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
<PAGE> 61
55
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
Facsimile: (860) 986-7920
Telephone: (860) 986-4545
Any such notice shall be effective when received.
<PAGE> 62
56
(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 of Contents are for convenience only and
shall not affect the construction hereof.
<PAGE> 63
57
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> 64
58
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________________________________
Title:____________________________
FLEET NATIONAL BANK,
as Trustee
By________________________________
Title:____________________________
<PAGE> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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 4.7
This Trust Supplement No. 1996-1A, dated as of ___________, 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 __, 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 $[ ].
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each _________ and ______ commencing _________,
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 ________ __, ____.
(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.
(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.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit B.
(g) A portion of the proceeds of the Series 1996-1A Certificates
shall be used to purchase the Series A Equipment Notes in the principal
amount specified below:
Series 1996-1A Trust Supplement
<PAGE> 3
3
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C> <C>
55-A __________, 20__
65-A __________, 20__
77-A __________, 20__
82-A __________, 20__
091-A __________, 20__
092-A __________, 20__
098-A __________, 20__
099-A __________, 20__
V0025-A __________, 20__
V0049-A __________, 20__
V0019-A __________, 20__
</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>
Manufacturer's
Equipment Serial Number
--------------- ----------------
<S> <C>
Airbus A320-231 55
Airbus A320-231 65
Airbus A320-231 77
Airbus A320-231 82
Airbus A320-231 091
Airbus A320-231 092
Airbus A320-231 098
Airbus A320-231 099
IAE V2500 V0025
IAE V2500 V0049
IAE V2500 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 1996-1A 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
Series 1996-1A Trust Supplement
<PAGE> 4
4
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 __, 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 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.
Series 1996-1A Trust Supplement
<PAGE> 5
5
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.
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
Series 1996-1A Trust Supplement
<PAGE> 6
6
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 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
Series 1996-1A Trust Supplement
<PAGE> 7
7
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 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.
Series 1996-1A Trust Supplement
<PAGE> 8
8
As used in this Article III, the terms "Certificateholder", "Class",
"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 Certificate", "Class E Certificateholder",
"Class E Trust" and "Class E 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.
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.
Series 1996-1A Trust Supplement
<PAGE> 9
9
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 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: _________ __, 199_
Final Distribution Date: __________ __, 200_
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
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 __, 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 __,
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 1996-1A" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms,
____________________
1 Not necessarily applicable in respect of one Certificate in definitive form.
Series 1996-1A Trust Supplement
<PAGE> 12
2
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 _________ and ______ (a "Regular Distribution Date")
commencing _________, 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 force and effect as if made on
such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the
Series 1996-1A Trust Supplement
<PAGE> 13
3
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 or 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 thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
Series 1996-1A Trust Supplement
<PAGE> 14
4
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 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>
</TABLE>
Series 1996-1A Trust Supplement
<PAGE> 18
EXHIBIT C
Related Note Documents
Series 1996-1A Trust Supplement
<PAGE> 1
Exhibit 4.8
This Trust Supplement No. 1996-1B, dated as of ___________, 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 __ , 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
B TRUST SUPP
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 $[ ].
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each _________ and ______ commencing _________,
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 ________ __, ____.
(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.
(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 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).
Series 1996-1B Trust Supplement
<PAGE> 3
3
(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) A portion of 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>
55-B __________, 20
65-B __________, 20
77-B __________, 20
82-B __________, 20
091-B __________, 20
092-B __________, 20
098-B __________, 20
099-B __________, 20
V0025-B __________, 20
V0049-B __________, 20
V0019-B __________, 20
</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>
Manufacturer's
Equipment Serial Number
--------- --------------
<S> <C>
Airbus A320-231 55
Airbus A320-231 65
Airbus A320-231 77
Airbus A320-231 82
Airbus A320-231 091
Airbus A320-231 092
Airbus A320-231 098
Airbus A320-231 099
IAE V2500 V0025
IAE V2500 V0049
IAE V2500 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
Series 1996-1B Trust Supplement
<PAGE> 4
4
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 preceeding 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.
Liquidity Facility: Means, initially, the Irrevocable Revolving Credit
Agreement dated as of November __, 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
Series 1996-1B Trust Supplement
<PAGE> 5
5
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 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.
Series 1996-1B Trust Supplement
<PAGE> 6
6
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 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
Series 1996-1B Trust Supplement
<PAGE> 7
7
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 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,
Series 1996-1B Trust Supplement
<PAGE> 8
8
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 "Certificateholder", "Class",
"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
Certificate", "Class E Certificateholder", "Class E Trust" and "Class E
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.
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
Series 1996-1B Trust Supplement
<PAGE> 9
9
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 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: _________ __, 199_
Final Distribution Date: _________ __, 200_
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
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 __, 1996 (the "Basic Agreement"), between the Trustee and
America West Airlines, Inc., a Delaware corporation (the "Company"), as
supplemented by Trust Supplement
____________________
1 Not necessarily applicable in respect of one Certificate in definitive form.
<PAGE> 12
2
No. 1996-1B thereto, dated as of November __, 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 _________ and ______ (a "Regular Distribution Date")
commencing _________, 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
Series 1996-1B Trust Supplement
<PAGE> 13
3
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 or 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
Series 1996-1B Trust Supplement
<PAGE> 14
4
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,
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 1996-1B Trust Supplement
<PAGE> 15
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 1996-1B
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>
</TABLE>
Series 1996-1B Trust Supplement
<PAGE> 18
EXHIBIT C
Related Note Documents
Series 1996-1B Trust Supplement
<PAGE> 1
Exhibit 4.9
This Trust Supplement No. 1996-1C, dated as of ___________, 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 __, 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 among
the Company and the Trustee as follows:
Series 1996-1C Trust Supplement
<PAGE> 2
C TRUST SUPP
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 Certificate are
as follows:
(a) The aggregate principal amount of the Series 1996-1C
Certificates that shall be authenticated under the Agreement (except for
Series 1996-1C Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $[ ].
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each _________ and ______ commencing _________,
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 __________ __, ____.
(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.
(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 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).
Series 1996-1C Trust Supplement
<PAGE> 3
3
(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) A portion of 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>
55-C __________, 20__
65-C __________, 20__
77-C __________, 20__
82-C __________, 20__
091-C __________, 20__
092-C __________, 20__
098-C __________, 20__
099-C __________, 20__
V0025-C __________, 20__
V0049-C __________, 20__
V0019-C __________, 20__
</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>
Manufacturer's
Equipment Serial Number
--------- --------------
<S> <C>
Airbus A320-231 55
Airbus A320-231 65
Airbus A320-231 77
Airbus A320-231 82
Airbus A320-231 091
Airbus A320-231 092
Airbus A320-231 098
Airbus A320-231 099
IAE V2500 V0025
IAE V2500 V0049
IAE V2500 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
Series 1996-1C Trust Supplement
<PAGE> 4
4
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 preceeding 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.
Liquidity Facility: Means, initially, the Irrevocable Revolving Credit
Agreement dated as of November __, 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
Series 1996-1C Trust Supplement
<PAGE> 5
5
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 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.
Series 1996-1C Trust Supplement
<PAGE> 6
6
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 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
Series 1996-1C Trust Supplement
<PAGE> 7
7
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, 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 "Certificateholder", "Class",
"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 Certificate",
"Class E
Series 1996-1C Trust Supplement
<PAGE> 8
8
Certificateholder", "Class E Trust" and "Class E 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.
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
1996-1C 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> 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 1996-1C 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 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: _________ __, 1996
Final Distribution Date: __________ __, 200_
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
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 __, 1996 (the "Basic Agreement"), between the
Trustee and America West Airlines, Inc., a Delaware corporation (the
"Company"), as supplemented by
_____________________
1 Not necessarily applicable in respect of one Certificate in definitive
form.
<PAGE> 11
2
Trust Supplement No. 1996-1C thereto, dated as of November __, 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 _________ and ______ (a "Regular Distribution Date")
commencing _________, 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
Series 1996-1C Trust Supplement
<PAGE> 12
3
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 or 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
Series 1996-1C Trust Supplement
<PAGE> 13
4
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,
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 1996-1C 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 1996-1C
By: FLEET NATIONAL BANK,
as Trustee
By:___________________
Name:_________________
Title:________________
Dated: _______________
Series 1996-1C 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 1996-1C Trust Supplement
<PAGE> 16
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
Series 1996-1C Trust Supplement
<PAGE> 17
EXHIBIT C
Related Note Documents
Series 1996-1C Trust Supplement
<PAGE> 1
Exhibit 4.10
This Trust Supplement No. 1996-1D, dated as of ___________, 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 __, 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 among the Company and the Trustee as follows:
Series 1996-1D Trust Supplement
<PAGE> 2
D TRUST SUPP
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 Certificate are
as follows:
(a) The aggregate principal amount of the Series 1996-1D
Certificates that shall be authenticated under the Agreement (except for
Series 1996-1D Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $[ ].
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each _________ and ______ commencing _________,
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 __________ __, ____.
(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.
(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 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.
Series 1996-1D Trust Supplement
<PAGE> 3
3
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit B.
(g) A portion of 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>
55-D __________, 20__
65-D __________, 20__
77-D __________, 20__
82-D __________, 20__
091-D __________, 20__
092-D __________, 20__
098-D __________, 20__
099-D __________, 20__
V0025-D __________, 20__
V0049-D __________, 20__
V0019-D __________, 20__
</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>
Manufacturer's
Equipment Serial Number
--------------- ----------------
<S> <C>
Airbus A320-231 55
Airbus A320-231 65
Airbus A320-231 77
Airbus A320-231 82
Airbus A320-231 091
Airbus A320-231 092
Airbus A320-231 098
Airbus A320-231 099
IAE V2500 V0025
IAE V2500 V0049
IAE V2500 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
Series 1996-1D Trust Supplement
<PAGE> 4
4
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.
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.
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.
Series 1996-1D Trust Supplement
<PAGE> 5
5
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.
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 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
Series 1996-1D Trust Supplement
<PAGE> 6
6
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 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 "Certificateholder", "Class",
"Class A Certificate", "Class A Trustee", ""Class B Certificate", "Class B
Trust Agreement", "Class B Trustee", "Class C Certificate", "Class C
Certificateholder", "Class C Trust Agreement", "Class C Trustee", "Class E
Certificate", "Class E Certificateholder", and "Class E Trust" shall have the
Series 1996-1D Trust Supplement
<PAGE> 7
7
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
1996-1D 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> 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 1996-1D 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 1996-1D
Pass Through
Certificate, Series 1996-1D
Issuance Date: _________ __, 1996
Final Distribution Date: __________ __, 200_
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
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 __, 1996 (the "Basic Agreement"), between the Trustee and
America West Airlines, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement
- ----------
1 Not necessarily applicable in respect of one Certificate in definitive
form.
<PAGE> 10
2
No. 1996-1D thereto, dated as of November __, 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 _________ and ______ (a "Regular Distribution Date")
commencing _________, 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
Series 1996-1D Trust Supplement
<PAGE> 11
3
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 or 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.
Series 1996-1D Trust Supplement
<PAGE> 12
4
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,
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> 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 1996-1D
By: FLEET NATIONAL BANK
as Trustee
By:___________________
Name:_________________
Title:________________
Dated: _______________
Series 1996-1D 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 1996-1D Trust Supplement
<PAGE> 15
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
Regular Distribution Date Scheduled Payment
Series 1996-1D Trust Supplement
<PAGE> 16
EXHIBIT C
Related Note Documents
Series 1996-1D Trust Supplement
<PAGE> 1
Exhibit 4.11
This Trust Supplement No. 1996-1E, dated as of ___________, 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 __, 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 among
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 (except for
Series 1996-1E Certificates authenticated and delivered pursuant to
Sections 3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $[ ].
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each _________ and ______ commencing _________,
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 __________ __, _____.
(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.
(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
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).
Series 1996-1E Trust Supplement
<PAGE> 3
E TRUST SUPP
3
(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>
091-E __________, 20__
092-E __________, 20__
098-E __________, 20__
099-E __________, 20__
V0025-E __________, 20__
V0049-E __________, 20__
V0019-E __________, 20__
</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>
Manufacturer's
Equipment Serial Number
--------------- ----------------
<S> <C>
Airbus A320-231 091
Airbus A320-231 092
Airbus A320-231 098
Airbus A320-231 099
IAE V2500 V0025
IAE V2500 V0049
IAE V2500 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 1996-1E 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
Series 1996-1E Trust Supplement
<PAGE> 4
4
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.
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. 1996-1D 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.
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 1996-1E Trust Supplement
<PAGE> 5
5
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 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
Series 1996-1E Trust Supplement
<PAGE> 6
6
Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement.
As used in this Article III, the terms "Certificateholder", "Class", "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.
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.
Series 1996-1E Trust Supplement
<PAGE> 7
7
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: _________ __, 1996
Final Distribution Date: __________ __, 200_
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
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 1996-1E 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 __, 1996 (the "Basic Agreement"), between the
Trustee and America West Airlines, Inc.,
a Delaware corporation (the "Company"), as supplemented by Trust
__________
1 Not necessarily applicable in respect of one Certificate in definitive
form.
<PAGE> 10
2
Supplement No. 1996-1E thereto, dated as of November __, 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 _________ and ______ (a "Regular Distribution Date")
commencing _________, 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
Series 1996-1E Trust Supplement
<PAGE> 11
3
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 or 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
Series 1996-1E Trust Supplement
<PAGE> 12
4
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,
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>
</TABLE>
Series 1996-1E Trust Supplement
<PAGE> 16
EXHIBIT C
Related Note Documents
Series 1996-1E Trust Supplement
<PAGE> 1
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
Dated as of November __, 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
[_._]% America West Airlines Pass Through Certificates,
Series 1996-1A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS ................................................ 1
Section 1.1 Certain Defined Terms ......................... 1
ARTICLE II
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 ................... 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
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.1 Affirmative Covenants of the Borrower ....... 18
Section 5.2 Negative Covenants of the Borrower .......... 18
ARTICLE VI
FINAL ADVANCE ............................................ 18
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 ................................ 23
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>
ii
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS A CERTIFICATES dated as of
November __, 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) and (y) with respect
to any other Advance including an Applied Downgrade Advance 1.5% (150 basis
points).
"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
<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, [$__,___,___] 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
2
<PAGE> 6
and disbursements of legal counsel and costs of investigation), provided that
Expenses shall not include any Taxes.
"Expiry Date" means [__], [____].
"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
3
<PAGE> 7
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.
"Margin" means 0.40% per annum.
"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.
4
<PAGE> 8
"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
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
5
<PAGE> 9
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.
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.
6
<PAGE> 10
(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 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.
7
<PAGE> 11
(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 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 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 pursuant to Section 2.6. 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 is intended to be a
contemporaneous exchange for new value given to the Borrower by the Liquidity
Provider.
8
<PAGE> 12
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 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.
9
<PAGE> 13
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 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, upon 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
10
<PAGE> 14
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 of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, 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 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, 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, upon 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.
Section 3.3 Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and
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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 Provider in immediately
available funds, by wire transfer to The Bank of New York, One Wall Street, New
York, NY 10286, ABA No.
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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 under this Section 3.7 other than to the extent the Borrower
shall have funds available therefor.
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(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
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 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:
(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
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(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.
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:
(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;
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(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, 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.
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(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 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.
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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 approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
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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
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
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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 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.
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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 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
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(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
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
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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 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.
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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.
(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
24
<PAGE> 28
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 __, 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/fifth/sixth] of Section 3.2 of the Intercreditor Agreement or
clause [sixth/seventh/eighth] 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 __, 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 short-term unsecured debt rating of the Liquidity
Provider issued by either Rating Agency below the 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 __, 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 4.13
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
Dated as of November __, 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
[_._]% America West Airlines Pass Through Certificates,
Series 1996-1B
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS ..................................... 1
Section 1.1 Certain Defined Terms ........................... 1
ARTICLE II
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 ..................... 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
<PAGE> 3
Page
Section 5.1 Affirmative Covenants of the Borrower ........... 18
Section 5.2 Negative Covenants of the Borrower .............. 18
ARTICLE VI
FINAL ADVANCE ................................... 18
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 ................................... 23
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
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS B CERTIFICATES dated as of
November __, 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) and (y) with respect
to any other Advance including an Applied Downgrade Advance 1.5% (150 basis
points).
"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
<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, [$__,___,___] 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
2
<PAGE> 6
and disbursements of legal counsel and costs of investigation), provided that
Expenses shall not include any Taxes.
"Expiry Date" means [__], [____].
"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
3
<PAGE> 7
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.
"Margin" means 0.40% per annum.
"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.
4
<PAGE> 8
"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 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
5
<PAGE> 9
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.
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.
6
<PAGE> 10
(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 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.
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(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 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 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 pursuant to Section 2.6. 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 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, upon 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
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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 of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, 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 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, 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,
upon 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.
Section 3.3 Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and
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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 Provider in
immediately available funds, by wire transfer to The Bank of New York, One Wall
Street, New York, NY 10286, ABA No.
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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 under this Section 3.7
other than to the extent the Borrower shall have funds available therefor.
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(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
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 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:
(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
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(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.
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:
(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;
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(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, 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.
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(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 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.
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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 approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
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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
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
19
<PAGE> 23
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 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.
20
<PAGE> 24
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 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
21
<PAGE> 25
(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 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
22
<PAGE> 26
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 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.
23
<PAGE> 27
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.
(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
24
<PAGE> 28
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 __, 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
[fourth/fifth/sixth] of Section 3.2 of the Intercreditor Agreement or
clause [sixth/seventh/eighth] 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 __, 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 short-term unsecured debt rating of the Liquidity
Provider issued by either Rating Agency below the 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 __, 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 4.14
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
Dated as of November __, 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
[_._]% America West Airlines Pass Through Certificates,
Series 1996-1C
<PAGE> 2
TABLE OF CONTENTS
Page
----
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 ........................... 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
<PAGE> 3
Page
----
Section 5.1 Affirmative Covenants of the Borrower ............ 18
Section 5.2 Negative Covenants of the Borrower ............... 18
ARTICLE VI
FINAL ADVANCE ........................... 18
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 ..................................... 23
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
ii
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS C CERTIFICATES dated as of
November __, 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) and (y) with respect
to any other Advance including an Applied Downgrade Advance 1.5% (150 basis
points).
"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, [$__,___,___] 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 [__], [____].
"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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<PAGE> 7
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.
"Margin" means 0.40% per annum.
"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.
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<PAGE> 8
"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
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
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<PAGE> 9
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.
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.
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<PAGE> 10
(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 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.
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<PAGE> 11
(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 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 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 pursuant to Section 2.6. 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 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 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 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.
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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 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, upon 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
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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 of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, 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 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, 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,
upon 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.
Section 3.3 Payments Free of Deductions. All payments made by the
Borrower under this Agreement shall be made free and
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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 Provider in
immediately available funds, by wire transfer to The Bank of New York, One Wall
Street, New York, NY 10286, ABA No.
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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 under this Section 3.7
other than to the extent the Borrower shall have funds available therefor.
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(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
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 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:
(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
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(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.
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:
(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;
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(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;
(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.
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(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 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.
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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 approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
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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
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
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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 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.
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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 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
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(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 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
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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 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.
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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.
(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
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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.
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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 __, 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
[fourth/fifth/sixth] of Section 3.2 of the Intercreditor Agreement or
clause [sixth/seventh/eighth] 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 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 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:
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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 __, 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 short-term unsecured debt rating of the Liquidity
Provider issued by either Rating Agency below the 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 __, 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 4.15
INTERCREDITOR AGREEMENT
Dated as of
November __, 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
SECTION 4.6 No Action Contrary to America West's Rights
Under the Lease...................................... 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.................... 51
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 __, 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
-4-
<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 __, 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.
-5-
<PAGE> 10
"Class A Trust Agreement" means the Pass Through Trust Agreement dated as
of November __, 1996 between America West and the Class A Trustee, as
supplemented by the Supplement No. 1996-1A thereto dated November __, 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 __, 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 __, 1996, between America West and the Class B Trustee, as
supplemented by the Supplement No. 1996-1B thereto dated November __, 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 __, 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.
-7-
<PAGE> 12
"Class C Trust Agreement" means the Pass Through Trust Agreement dated as
of November __, 1996, between America West and the Class C Trustee, as
supplemented by the Supplement No. 1996-1C thereto dated November __, 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 __, 1996, between America West and the Class D Trustee, as
supplemented by the Supplement No. 1996-1D thereto dated November __, 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 __, 1996, between America West and the Class E Trustee, as
supplemented by the Supplement No. 1996-1E thereto dated November __, 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 __, 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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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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"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 each of the Class A
Certificates, the Class B Certificates and the Class C Certificates, _________
__, 20__, for the Class D Certificates, _________ __, 20__ and for the Class E
Certificates, _________ __, 20__.
"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 39.9%, for the Class B
Certificates 54.8%, for the Class C Certificates 69.8%, for the Class D
Certificates 81.4% 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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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 _________ __, commencing on
_________ __, 199_; 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 [____]% 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 [_____]% 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 [_____]% 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 [____]% 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 [____]% 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,
[____]% per annum, (ii) with respect to the Class B Certificates, [____]% per
annum, and (iii) with respect to the Class C Certificates, [____]% 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
__, 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) 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 such 30th day is not a
Business Day, on the next succeeding
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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 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. 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 Certificateholders, 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 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
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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;
(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
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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 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
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(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.
(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
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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 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.
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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.
(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.
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(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.
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
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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, except in accordance with the provisions of such Lease.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event.
(a) In the event the Subordination Agent shall have actual knowledge of the
occurrence of an Indenture Default or a
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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.
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 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
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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 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 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.
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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 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
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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.
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
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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 reimbursements for expenses contained
in such Sections of the Leases and the Refunding Agreements shall survive the
termination of this Agreement.
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
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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.
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.
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<PAGE> 54
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 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
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<PAGE> 55
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 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
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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
(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.
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<PAGE> 57
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.
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
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<PAGE> 58
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 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
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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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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:
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
<PAGE> 62
SCHEDULE 2 TO
INTERCREDITOR AGREEMENT
Refunding Agreements
<PAGE> 1
EXHIBIT 4.16
- --------------------------------------------------------------------------------
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
[OWNER PARTICIPANT]
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. 65
Registration No. N626AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<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 . . . . . . . . . . . . . . . 21
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 . . . . . . . . . 22
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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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <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
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
Exhibit E Form of Opinions of Paul, Hastings, Janofsky & Walker LLP and
Milbank, Tweed, Hadley & McCloy addressed to Parent Guarantor
Exhibit F Form of Opinions of Paul, Hastings, Janofsky & Walker LLP and
Milbank, Tweed, Hadley & McCloy addressed to Lessee
</TABLE>
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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) [OWNER PARTICIPANT] (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 (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 GPA Offshore entered
into the Japanese Lease Agreement [GPA 1989
<PAGE> 5
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;
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 Original Head Lessee
entered into a Lease Assignment, dated as of September 28, 1989 ("First
Japanese Lease Assignment") pursuant
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<PAGE> 6
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 the
terms and conditions set forth therein, the Owner Trustee agreed to lease to
the Original Head Lessee, and the Original
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<PAGE> 7
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 (as amended, modified or otherwise
supplemented to the date hereof, the "Sublease Guaranty") for the benefit of
the Sublessee
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<PAGE> 8
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 (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 Assumption 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,
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");
WHEREAS, at the Closing, the Parent Guarantor and
_______________ (the "Deposit Bank") will enter into the Yen
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<PAGE> 10
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 which are hereby acknowledged, the
parties hereto agree as follows:
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<PAGE> 11
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 First Amended and Restated Indenture
and the other Operative Documents (as defined in the First
Amended and Restated Indenture) payable on the Restatement
Date under Section 2.16(b)(ii) of the First Amended and
Restated 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
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<PAGE> 12
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, terminating certain rights which the Parent
Guarantor has to "put" the 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); 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.
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<PAGE> 13
(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 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
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<PAGE> 14
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 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;
(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;
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<PAGE> 15
(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 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
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<PAGE> 16
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, 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
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<PAGE> 17
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 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> 18
(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
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.
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<PAGE> 19
(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 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.
(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 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
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<PAGE> 20
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, 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 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
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<PAGE> 21
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 such other
documents and evidence with respect to each other party hereto as the Owner
Participant or its counsel may 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.
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 and 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
(9) 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) 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 substantially the
form of Exhibit E attached hereto; and
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<PAGE> 23
(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, the taking of all
necessary action in connection therewith and compliance with the
conditions herein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A), 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; and
(8) Uniform Commercial Code termination statements
relating to the Sublease executed by the Original
Head Lessee.
(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);
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<PAGE> 24
(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(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 substantially the
form of Exhibit F attached hereto.
(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, the
taking of all necessary action in connection therewith and compliance
with the conditions herein 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, 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
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<PAGE> 25
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 from
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, the Parent Guarantor, 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 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 not 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 indebtedness or 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 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
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<PAGE> 27
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. 2, the First Amended and Restated Indenture and Indenture
Supplement No. 2, all with the FAA, the filing of a Uniform Commercial Code
("UCC") amended financing statement with the Secretary of State
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<PAGE> 28
of the State of Delaware with regard to the Original Lease, the filing of a
protective UCC financing statement with the Secretary of State of the State of
Arizona with respect to the Second Amended and Restated 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 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 or advisable, 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
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<PAGE> 29
good faith by appropriate proceedings and with appropriate reserves;
(n) the financial statements 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;
(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 foreign country
designated in Executive Order No. 8389, as amended, or of any "designated enemy
country" as defined in Executive Order 9193, as amended, of the President of
the United States, within the meaning of said Executive Orders, as amended, or
of any regulations, interpretations or rulings issued thereunder, or 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
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<PAGE> 30
furnished to the Owner Participant or the Indenture Trustee by the Lessee in
connection herewith, including, without limitation, the financial statements
contained in the Registration Statement, 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 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, the Yen Deposit Charge Agreement and
each other Operative
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<PAGE> 31
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.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (6) and (8) below, which representations
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<PAGE> 32
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 this
Agreement and Trust Supplement No. 3 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 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 Trust Supplement No. 3 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;
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<PAGE> 33
(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 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
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<PAGE> 34
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 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
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<PAGE> 35
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 and the Second Amended and Restated Head Lease TIA;
this Agreement and Trust Supplement No. 3 have been duly
authorized, executed and delivered by it; and this Agreement,
the Trust 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
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
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<PAGE> 36
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 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, any Person; 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;
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<PAGE> 37
(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
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:
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<PAGE> 38
(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 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
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<PAGE> 39
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 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
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<PAGE> 40
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 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
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<PAGE> 41
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 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
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<PAGE> 42
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:
(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.
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<PAGE> 43
1, the Second Amended and Restated Head Lease TIA and the
Amended and Restated Sublease TIA (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;
(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
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<PAGE> 44
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; and
(7) title to the Buyer Furnished Equipment for the
Aircraft 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.
(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
- 41 -
<PAGE> 45
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; and
(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.
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 Second
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
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<PAGE> 46
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, 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, [or a
corporation] with a net worth of at least $60,000,000 [exclude
goodwill], (B) any wholly-owned subsidiary [or limited
liability company] 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 [or limited
liability company'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 a party or by which it 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 subsidiary's [or
Affiliate'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 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 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];
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<PAGE> 47
(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 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 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;
(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;
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<PAGE> 48
(x) the terms of the Operative Documents and the
Second Amended and Restated Head Lease TIA shall not be
altered; and
(xi) such Transferee shall agree that Lessee and
Original Head Lessee shall have no greater liability to such
Transferee under the Operative Documents (other than under
Section 10 of the Lease) than Lessee or Original Head Lessee
would have had to Owner Participant on the date of the
transfer to the Transferee.
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 accrued or been made prior to the date of such transfer. The
transferor Owner Participant shall pay all [reasonable] 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
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<PAGE> 49
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 Trustee shall have received a certificate
from Lessee that
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<PAGE> 50
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 as sublessor, upon compliance with the provisions of
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<PAGE> 51
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, and
(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.
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 re-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
all conditions precedent provided for in this Agreement and the Lease relating
to the proposed re-registration of the Aircraft have been
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<PAGE> 52
complied with and that the re-registration is in conformity with the
requirements of this Agreement and the Lease and that after giving effect to
such re-registration, no Event of Default shall have occurred and be
continuing, 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.
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 different from those of the United States of America
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, 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
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<PAGE> 53
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 or disposition
of title attributable to Indenture Trustee in its individual capacity (and not
as Indenture Trustee, Pass Through
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<PAGE> 54
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
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> 55
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 such 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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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 [(subject to the exclusions set forth in Section 10(b) of the
Lease and the exclusions in Section [_] of the Second 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
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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] [on an after tax basis] [(subject to
the exclusions set forth in Section 10(b) of the Lease [and Section [__] of the
Amended and Restated Sublease TIA])] from and against any Taxes that would not
have been imposed in the absence of 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 Second 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 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 Original Head Lessee and the Parent Guarantor jointly
and severally covenants that after the Restatement Date the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be free and clear of
any 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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(f) 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 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.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as amongst themselves that the following rights, benefits, obligations
and liabilities (such rights, benefits, obligations and liabilities, [together
with the rights and obligations under Section 15(c) below,] are, collectively,
the "Retained Sublease Rights and Obligations"), shall survive the termination
of the Sublease and the Sublease Guaranty: (i) Original Head Lessee and Parent
Guarantor shall retain all rights and benefits, and Sublessee shall remain
liable for all of its obligations, under the Sublease including under Sections
10 and 13 of the Sublease, with respect to the period [on or] prior to 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 on or after
the Restatement Date under the Sublease in respect of the period prior to, or
acts or omissions or circumstances arising prior to, the Restatement Date),
(ii) all rights, benefits, obligations and liabilities under the Sublease TIA
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, if any, in
existence on the Restatement Date, 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.
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(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:
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 and benefits, and Sublessee shall remain liable for all
of its obligations under Section[s 10 and] 13 of the Sublease with respect to
the period [on or] prior to 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
prior to, or acts or omissions or circumstances arising prior to, [or on] 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
Section[s 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) 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 Lease) (as in effect
immediately prior to 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 that all rights, benefits,
obligations and liabilities under Sections 7(c) and 7(d) of the Participation
Agreement with respect to the period [on or] prior to 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 on or after the Restatement Date under the
Participation Agreement in respect of the period or acts or omissions or
circumstances arising prior to [or on] the Restatement Date) shall survive the
termination of the Participation Agreement, the Original Lease and the Parent
Head Lease Guaranty, all of which rights, benefits, obligations and liabilities
shall expressly survive the termination of the Participation Agreement (the
foregoing 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
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<PAGE> 60
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 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
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<PAGE> 61
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 of
termination elected 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
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<PAGE> 62
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 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, 11 and 19 thereof) require transfer of
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<PAGE> 63
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 in furtherance thereof 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
- 60 -
<PAGE> 64
the Yen Deposit Charge Agreement. The Owner Trustee and Indenture Trustee
hereby agree to release or cause the release to the Parent Guarantor 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 Agreement 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
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<PAGE> 65
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 Greenwich Office Park I, Greenwich, Connecticut 06836 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.
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<PAGE> 66
(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 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)
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<PAGE> 67
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 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. Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Original
Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture
Trustee, the Owner Participant, the Subordination Agent and the
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<PAGE> 68
Pass Through Trustee, and the Original Lessee's, the Parent Guarantor's, the
Lessee's, the Owner Trustee's, the Indenture Trustee's, the Owner
Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination 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 such Person be given
notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit 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
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<PAGE> 69
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.
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.
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<PAGE> 70
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) 693-5990
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> 71
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
[OWNER PARTICIPANT]
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> 72
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> 73
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November __, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1A, dated November __, 1996.
2. Pass Through Trust Agreement, dated as of November __, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1B, dated November __, 1996.
3. Pass Through Trust Agreement, dated as of November __, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1C, dated November __, 1996.
4. Pass Through Trust Agreement, dated as of November __, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1996-1D, dated November __, 1996.
<PAGE> 74
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate Principal Purchase
Pass Through Trusts and Maturity Amount Price
- ------------------- ------------- --------- --------
<S> <C> <C> <C>
</TABLE>
<PAGE> 75
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
<PAGE> 76
SCHEDULE IV to
Refunding Agreement
OP SLV AMOUNT
[to come]
<PAGE> 77
SCHEDULE V to
Refunding Agreement
GPA SLV AMOUNT
[to come]
<PAGE> 78
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, CHRYSLER CAPITAL CORPORATION, a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1989 BN-6], dated as of November __, 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> 79
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> 80
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> 81
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> 82
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.
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 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
- 5 -
<PAGE> 83
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 a bank, [trust company] or [other
like regulated] financial institution, [or a corporation] 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
- 6 -
<PAGE> 84
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> 85
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> 86
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 __, 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, Chrysler Capital Corporation, 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> 87
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> 88
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> 89
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> 90
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> 91
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[to come]
<PAGE> 92
EXHIBIT E to
REFUNDING AGREEMENT
FORM OF OPINIONS OF PAUL, HASTINGS, JANOFSKY &
WALKER LLP AND MILBANK, TWEED, HADLEY & McCLOY
ADDRESSED TO PARENT GUARANTOR
[to come]
<PAGE> 93
EXHIBIT F to
REFUNDING AGREEMENT
FORM OF OPINIONS OF PAUL, HASTINGS, JANOFSKY &
WALKER LLP AND MILBANK, TWEED, HADLEY & McCLOY
ADDRESSED TO LESSEE
[to come]
<PAGE> 1
EXHIBIT 4.17
- --------------------------------------------------------------------------------
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
[OWNER PARTICIPANT]
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
<TABLE>
<CAPTION>
Page
<S> <C>
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........................... 19
SECTION 8. Representations and Warranties of the Lessee................. 20
SECTION 9. Representations and Warranties............................... 24
SECTION 10. Transfer of Owner Participant's Interest.................... 39
SECTION 11. Re-Registration of the Aircraft............................. 43
SECTION 12. Quiet Enjoyment............................................. 46
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
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.......................... 54
SECTION 19. Limitation on Recourse...................................... 56
</TABLE>
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<PAGE> 3
Page
SECTION 20. Notices................................................ 56
SECTION 21. Expenses............................................... 56
SECTION 22. Reliance of Liquidity Provider......................... 57
SECTION 23. Miscellaneous.......................................... 57
SECTION 24. Governing Law.......................................... 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
Exhibit E Form of Opinions of Paul, Hastings, Janofsky & Walker LLP and
Milbank, Tweed, Hadley & McCloy addressed to Parent Guarantor
Exhibit F Form of Opinions of Paul, Hastings, Janofsky & Walker LLP and
Milbank, Tweed, Hadley & McCloy addressed to Lessee
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<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) [OWNER PARTICIPANT] (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-10], dated December 22, 1989 (as so supplemented, the "Original Indenture");
<PAGE> 5
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
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<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 (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 Assumption 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 Restated Head Lease
Tax Indemnification Agreement, amending and
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<PAGE> 8
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 First
Amended and Restated Indenture and the other Operative
Documents (as defined in the First Amended and Restated
Indenture) payable on the Restatement Date under Section
2.16(b)(ii) of the First Amended and Restated 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;
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<PAGE> 10
(ix) 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;
(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, terminating certain rights which the Parent
Guarantor has to "put" the 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); 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.,
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<PAGE> 11
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.
(b) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed
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<PAGE> 12
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 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;
(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
- 9 -
<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
- 10 -
<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;
- 11 -
<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
- 12 -
<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 shall have received an opinion
from (i) White & Case, special counsel for the Liquidity
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<PAGE> 17
Provider, and (ii) in-house counsel for the Liquidity Provider, in each case in
form and substance satisfactory to the Pass Through Trustee.
(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 such other
documents and evidence with respect to each other party hereto as the Owner
Participant or its counsel may 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.
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,
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<PAGE> 19
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.
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; and
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee.
(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);
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<PAGE> 20
(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) 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 substantially the form of Exhibit E
attached hereto; 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, the taking of all
necessary action in connection therewith and compliance with the
conditions herein 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;
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<PAGE> 21
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement; and
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee.
(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(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 substantially the form of Exhibit F
attached hereto.
(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, the
taking of all necessary action in connection therewith and compliance
with the conditions herein 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
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<PAGE> 22
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, 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.
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 from 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
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<PAGE> 23
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, the Parent Guarantor, 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 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
not 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 indebtedness or 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 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
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<PAGE> 24
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 materially
adversely affect the ability of Lessee to enter into or perform its obligations
under the Lessee Documents;
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<PAGE> 25
(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. 2, the First Amended and Restated Indenture and Indenture
Supplement No. 2, 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 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 or advisable,
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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<PAGE> 26
(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 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;
(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 foreign country
designated in Executive Order No. 8389, as amended, or of any "designated enemy
country" as defined in Executive Order 9193, as amended, of the President of the
United States, within the meaning of said Executive Orders, as amended, or of
any regulations, interpretations or rulings issued thereunder, or 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
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<PAGE> 27
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,
including, without limitation, the financial statements contained in the
Registration Statement, 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 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
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<PAGE> 28
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 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> 29
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;
(2) (i) each of the Trust Company and 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 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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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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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 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> 32
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 and the Second Amended and Restated Head Lease TIA;
this Agreement and Trust Supplement No. 3 have been duly
authorized, executed and delivered by it; and this Agreement,
the Trust 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
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<PAGE> 33
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
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 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
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<PAGE> 34
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,
any Person; 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
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<PAGE> 35
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 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
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<PAGE> 36
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 the Pass Through Trust Agreements), and
such trusts will not be subject to any Taxes imposed by the
State of Connecticut or any
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<PAGE> 37
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:
(1) the Subordination Agent is a duly organized
national banking association, validly existing and in
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<PAGE> 38
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, the registration with,
or the taking of any other action with respect to, any State
of Connecticut
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<PAGE> 39
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 Agent is not in default under any Liquidity
Facility; and
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<PAGE> 40
(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 and the
Amended and Restated Sublease TIA (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
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<PAGE> 41
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; and
(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.
(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
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.
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 Second Amended
and Restated Head Lease TIA or any other Operative
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<PAGE> 43
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 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, 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, [or a corporation] with a net worth
of at least $60,000,000 [exclude goodwill], (B) any wholly-owned
subsidiary [or limited liability company] 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 [or limited liability
company'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 a party or by which it 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
subsidiary's [or Affiliate'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 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 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
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<PAGE> 44
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 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 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;
(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
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<PAGE> 45
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;
(x) the terms of the Operative Documents and the Second
Amended and Restated Head Lease TIA shall not be altered; and
(xi) such Transferee shall agree that Lessee and Original
Head Lessee shall have no greater liability to such Transferee under
the Operative Documents (other than under Section 10 of the Lease) than
Lessee or Original Head Lessee would have had to Owner Participant on
the date of the transfer to the Transferee.
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 accrued or been made prior to the date of such transfer. The transferor
Owner Participant shall pay all [reasonable] 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)
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<PAGE> 46
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 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
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<PAGE> 47
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,
(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
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<PAGE> 48
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, and
(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.
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 re-registration.
Prior to the re-registration of the Aircraft as contemplated
by this Section 11, Lessee shall furnish to Owner
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<PAGE> 49
Participant and Indenture Trustee (1) an Officer's Certificate (as defined in
the Indenture) stating that all conditions precedent provided for in this
Agreement and the Lease relating to the proposed re-registration of the Aircraft
have been complied with and that the re-registration is in conformity with the
requirements of this Agreement and the Lease and that after giving effect to
such re-registration, no Event of Default shall have occurred and be continuing,
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.
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 different from those of the United States of America 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,
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,
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<PAGE> 50
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 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
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<PAGE> 51
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
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
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<PAGE> 52
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 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
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<PAGE> 53
all Persons entitled to indemnification pursuant to such 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 [(subject to the exclusions set forth in Section 10(b) of the Lease and
the exclusions in Section [_] of the Second 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
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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] [on an after tax basis] [(subject to the exclusions set forth in
Section 10(b) of the Lease [and Section [__] of the Amended and Restated
Sublease TIA])] from and against any Taxes that would not have been imposed in
the absence of 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 Second
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 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 Original Head Lessee and the Parent Guarantor jointly
and severally covenants that after the Restatement Date the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be free and clear of any
Lien or disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have
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constituted a Sublessor's Lien had the Sublease remained in effect.
(f) 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 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.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as amongst themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities, [together with
the rights and obligations under Section 15(c) below,] are, collectively, the
"Retained Sublease Rights and Obligations"), shall survive the termination of
the Sublease and the Sublease Guaranty: (i) Original Head Lessee and Parent
Guarantor shall retain all rights and benefits, and Sublessee shall remain
liable for all of its obligations, under the Sublease, including under Sections
10 and 13 of the Sublease, with respect to the period [on or] prior to 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 on or after
the Restatement Date under the Sublease in respect of the period prior to, or
acts or omissions or circumstances arising prior to, the Restatement Date), (ii)
all rights, benefits, obligations and liabilities under the Sublease TIA 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, if any, in existence on the Restatement Date,
and (y) Parent Guarantor is hereby released from any and all obligations and
liabilities
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<PAGE> 56
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: 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 and
benefits, and Sublessee shall remain liable for all of its obligations under
Section [s 10 and] 13 of the Sublease with respect to the period [on or] prior
to 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 prior to, or acts or omissions or
circumstances arising prior to, [or on] 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 Section [s 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) 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 Lease) (as in effect immediately prior to
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 that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period [on or] prior to 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 on or after the Restatement Date under the Participation
Agreement in respect of the period or acts or omissions or circumstances arising
prior to [or on] the Restatement Date) shall survive the termination of the
Participation Agreement, the Original Lease and the Parent Head Lease Guaranty,
all of which rights, benefits, obligations and liabilities shall expressly
survive the termination of the
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<PAGE> 57
Participation Agreement (the foregoing 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.
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
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<PAGE> 58
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 Greenwich Office Park I, Greenwich, Connecticut 06836 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
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<PAGE> 59
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 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;
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<PAGE> 60
(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. Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Original
Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture
Trustee, the Owner Participant, the Subordination Agent and the Pass Through
Trustee, and the Original Lessee's, the Parent Guarantor's, the Lessee's, the
Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the
Subordination Agent's and the Pass Through Trustee's obligations under any and
all thereof, shall survive the expiration or other termination 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
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<PAGE> 61
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 such Person be given notice
shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of each 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.
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<PAGE> 62
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.
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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
[OWNER PARTICIPANT]
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 ___, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1A, dated November ___, 1996.
2. Pass Through Trust Agreement, dated as of November ___, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1B, dated November ___, 1996.
3. Pass Through Trust Agreement, dated as of November ___, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1C, dated November ___, 1996.
4. Pass Through Trust Agreement, dated as of November ___, 1996, among
America West Airlines, Inc. and Fleet National Bank, as supplemented by
Trust Supplement No. 1996-1D, dated November ___, 1996.
<PAGE> 68
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<CAPTION>
Interest Rate Principal Purchase
Pass Through Trusts and Maturity Amount Price
- ------------------- ------------ ------ -----
<S> <C> <C> <C>
</TABLE>
<PAGE> 69
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
<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, CHRYSLER CAPITAL CORPORATION, a Delaware corporation
("Transferor"), is the Owner Participant under that certain Refunding Agreement
[GPA 1989 BN-10], dated as of November __, 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
- 4 -
<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, and shall
be made in U.S. Dollars.
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,
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<PAGE> 75
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
(h) the Guarantor is a bank, [trust company] or [other like
regulated] financial institution, [or a corporation] 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
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<PAGE> 76
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.
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
- 7 -
<PAGE> 77
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:
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<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 __, 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,
Chrysler Capital Corporation, 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
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<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.
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<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:
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<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
[to come]
<PAGE> 86
EXHIBIT E to
REFUNDING AGREEMENT
FORM OF OPINIONS OF PAUL, HASTINGS, JANOFSKY &
WALKER LLP AND MILBANK, TWEED, HADLEY & McCLOY
ADDRESSED TO PARENT GUARANTOR
[to come]
<PAGE> 87
EXHIBIT F to
REFUNDING AGREEMENT
FORM OF OPINIONS OF PAUL, HASTINGS, JANOFSKY &
WALKER LLP AND MILBANK, TWEED, HADLEY & McCLOY
ADDRESSED TO LESSEE
[to come]
<PAGE> 1
EXHIBIT 4.18
- -------------------------------------------------------------------------------
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>
<CAPTION>
TABLE OF CONTENTS
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.......................................................................................... 40
SECTION 11. Re-Registration of the Aircraft.................................................................... 43
SECTION 12. Quiet Enjoyment.................................................................................... 45
SECTION 13. Liens ......................................................................................... 45
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent
Guarantor, Trust Company, Owner Trustee
and Owner Participant............................................................................. 48
SECTION 15. Certain Retained Rights and Releases............................................................... 51
</TABLE>
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<PAGE> 3
<TABLE>
PAGE
----
<S> <C>
SECTION 16. Certain Additional Obligations of the
Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee.................................................... 53
SECTION 17. Lessee Protection of Title......................................................................... 53
SECTION 18. Jurisdictional and Related Matters................................................................. 53
SECTION 19. Limitation on Recourse............................................................................. 54
SECTION 20. Notices ......................................................................................... 54
SECTION 21. Expenses ......................................................................................... 55
SECTION 22. Reliance of Liquidity Provider..................................................................... 56
SECTION 23. Miscellaneous...................................................................................... 56
SECTION 24. Governing Law...................................................................................... 57
</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
Exhibit E Form of Opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley & McCloy
addressed to Parent Guarantor
Exhibit F Form of Opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley & McCloy
addressed to Lessee
- 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) _____________, (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 Indenture Trustee entered
into the Trust Indenture and Security
<PAGE> 5
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 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 Assumption 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
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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 Amended and Restated Indenture and the other
Operative Documents (as defined in the Amended and Restated Indenture)
payable on the Restatement Date under Section 2.12 of the Amended and
Restated 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
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<PAGE> 9
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;
(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, terminating
certain rights which the Parent Guarantor has to "put" the 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); 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;
(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. 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;
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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 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
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
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<PAGE> 16
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 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.
(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 such other
documents and evidence with respect to each other party hereto as the
Owner Participant or its counsel may 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.
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
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<PAGE> 19
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; and
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee.
(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) 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 substantially the form of Exhibit E
attached hereto; and
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<PAGE> 20
(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, the taking of all
necessary action in connection therewith and compliance with the
conditions herein 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; and
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee.
(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);
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<PAGE> 21
(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(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 substantially the form of Exhibit F
attached hereto.
(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, the
taking of all necessary action in connection therewith and compliance
with the conditions herein 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.
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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 on and from 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, the Parent Guarantor, the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Liquidity Provider and the Indenture Trustee that:
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(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
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 not 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 indebtedness or 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 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
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<PAGE> 24
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;
(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;
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<PAGE> 25
(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, 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 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 or
advisable, 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;
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<PAGE> 26
(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 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;
(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 foreign country
designated in Executive Order No. 8389, as amended, or of any
"designated enemy country" as defined in Executive Order 9193, as
amended, of the President of the United States, within the meaning of
said Executive Orders, as amended, or of any regulations,
interpretations or rulings issued thereunder, or 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
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<PAGE> 27
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, including, without limitation, the financial statements
contained in the Registration Statement, 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 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
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<PAGE> 28
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) 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 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
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<PAGE> 29
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, 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 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 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
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<PAGE> 30
equity, (ii) the Owner Trustee has duly authorized, executed
and delivered this Agreement (assuming the due authorization,
execution and delivery of Trust Supplement No. 2 by the Owner
Participant) this Agreement and the Trust Agreement
constitutes, 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 mortgage,
deed of trust, conditional sale contract, bank loan or credit
agreement, license or other
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<PAGE> 31
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 capacity or as Owner
Trustee) any or all of its duties under the Operative
Documents in, and (c) engaged in
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<PAGE> 32
any activities unrelated to the transactions contem-
plated 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 and the Amended and Restated Head Lease TIA; this
Agreement and Trust Supplement No. 2 have been duly
authorized, executed and delivered by it; and this Agreement,
the Trust 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
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<PAGE> 33
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
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 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 or the Amended and Restated
Head Lease TIA;
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<PAGE> 34
(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, any Person; 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 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
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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
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<PAGE> 36
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 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
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<PAGE> 37
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
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common
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<PAGE> 38
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 to which the Subordination Agent
is a party or by which it or any of its properties may be
bound;
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<PAGE> 39
(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;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any
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<PAGE> 40
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 and the Amended
and Restated Sublease TIA (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
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<PAGE> 41
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; and
(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.
(g) The Parent Guarantor represents and warrants that:
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<PAGE> 42
(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> 43
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.
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, or a corporation with a net worth of
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
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<PAGE> 44
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 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,
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<PAGE> 45
an air freight forwarder, Person engaged in the business of
parcel transport by air;
(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;
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered; and
(xi) such Transferee shall agree that Lessee and Original
Head Lessee shall have no greater liability to such Transferee under
the Operative Documents (other than under Section 10 of the Lease) than
Lessee or Original Head Lessee would have had to Owner Participant on
the date of the transfer to the Transferee.
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
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<PAGE> 46
pay the reasonable 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) 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
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<PAGE> 47
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 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 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.
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<PAGE> 48
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 different from those of the United States of America 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,
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
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
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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 indem-
nifiable 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 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
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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
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 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.
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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, and (iii) not to
terminate or revoke the Trust Agreement except in accordance with the terms
thereof.
(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 Amended and Restated Head Lease TIA, unless
any and all Persons entitled to indemnification pursuant to such 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.
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<PAGE> 52
(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 Section [_] of 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] [on
an after tax basis] [(subject to the exclusions set forth in Section 10(b) of
the
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Lease [and Section [_] of the Amended and Restated Sublease TIA])] from and
against any Taxes that would not have been imposed in the absence of 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 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 Original Head Lessee and the Parent Guarantor jointly
and severally covenants that after the Restatement Date the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be free and clear of any
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.
(f) 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 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.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as amongst themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities, [together with
the rights and obligations under Section 15(c) below,] are, collectively, the
"Retained Sublease Rights and Obligations"), shall survive the termination of
the Sublease and the Sublease Guaranty: (i) Original Head Lessee and Parent
Guarantor shall retain all rights and benefits, and Sublessee shall remain
liable for all of its obligations, including under Sections 10 and 13 of the
Sublease, with respect to the period [on or] prior to 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 on or after the Restatement Date under
the Sublease in respect of the period prior to, or acts or omissions or
circumstances arising prior to, the Restatement Date), (ii) all rights,
benefits, obligations and liabilities under the Sublease TIA 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, if any, in existence on the Restatement Date,
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: 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 and
benefits, and Sublessee shall remain liable for all of its obligations under
Section [s 10 and] 13 of the Sublease with respect to the period [on
or] prior to the Restatement Date and each of Lessee, Owner Trustee and Owner
Participant shall
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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 arising prior to, or acts or omissions or
circumstances arising prior to, [or on] 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 Section [s 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) 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 Lease) (as in effect immediately prior to
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 that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period [on or] prior to 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 on or after the Restatement Date under the Participation
Agreement in respect of the period prior to, or acts or omissions or
circumstances arising prior to, [or on] the Restatement Date) shall survive the
termination of the Participation Agreement, the Original Lease and the Parent
Head Lease Guaranty, all of which rights, benefits, obligations and liabilities
shall expressly survive the termination of the Participation Agreement (the
foregoing 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.
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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, 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,
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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 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
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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;
(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
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(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. Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Original
Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture
Trustee, the Owner Participant, the Subordination Agent and the Pass Through
Trustee, and the Original Lessee's, the Parent Guarantor's, the Lessee's, the
Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the
Subordination Agent's and the Pass Through Trustee's obligations under any and
all thereof, shall survive the expiration or other termination 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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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 such Person be given notice
shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of each 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.
- 57 -
<PAGE> 61
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> 62
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
[OWNER PARTICIPANT]
- ---------------------------
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> 63
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> 64
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November , 1996,
among America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1A, dated
November , 1996.
2. Pass Through Trust Agreement, dated as of November , 1996,
among America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1B, dated
November , 1996.
3. Pass Through Trust Agreement, dated as of November , 1996,
among America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1C, dated
November , 1996.
4. Pass Through Trust Agreement, dated as of November , 1996,
among America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1D, dated
November , 1996.
5. Pass Through Trust Agreement, dated as of November , 1996,
among America West Airlines, Inc. and Fleet National Bank,
as supplemented by Trust Supplement No. 1996-1E, dated
November , 1996.
<PAGE> 65
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Interest Rate Principal Purchase
Pass Through Trusts and Maturity Amount Price
<PAGE> 66
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
<PAGE> 67
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 , 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> 68
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> 69
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> 70
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> 71
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.
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;
- 5 -
<PAGE> 72
(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
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<PAGE> 73
(h) the Guarantor is a bank, trust company or other like
regulated financial institution, or a corporation 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.
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<PAGE> 74
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> 75
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> 76
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 , 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> 77
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> 78
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
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 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 net worth of not
less than $60,000,000.
- 3 -
<PAGE> 79
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> 80
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> 81
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[to come]
<PAGE> 82
EXHIBIT E to
REFUNDING AGREEMENT
FORM OF OPINIONS OF PAUL, HASTINGS, JANOFSKY &
WALKER LLP AND MILBANK, TWEED, HADLEY & McCLOY
ADDRESSED TO PARENT GUARANTOR
[to come]
<PAGE> 83
EXHIBIT F to
REFUNDING AGREEMENT
FORM OF OPINIONS OF PAUL, HASTINGS, JANOFSKY &
WALKER LLP AND MILBANK, TWEED, HADLEY & McCLOY
ADDRESSED TO LESSEE
[to come]
<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
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. Purchase of Equipment Notes; Refunding . . . . . . . . . . . . 4
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 14
SECTION 5. Amendment and Restatement of the Original Indenture . . . . . . 17
SECTION 6. Amendment and Restatement of the Original Lease . . . . . . . . 17
SECTION 7. Termination of the Participation Agreement; Termination of
Sublease, etc . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8. Representations and Warranties of the Lessee . . . . . . . . . 18
SECTION 9. Representations and Warranties . . . . . . . . . . . . . . . . 22
SECTION 10. Transfer of Owner Participant's Interest . . . . . . . . . . . 36
SECTION 11. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 13. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 14. Certain Additional Provisions Relating
to Original Head Lessee, Parent Guarantor, Trust Company,
Owner Trustee and Owner Participant . . . . . . . . . . . . . 41
SECTION 15. Certain Retained Rights and Releases . . . . . . . . . . . . . 43
SECTION 16. Certain Additional Obligations of the Lessee,
the Owner Trustee, the Owner Participant and the Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 17. Lessee Protection of Title . . . . . . . . . . . . . . . . . . 45
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 18. Jurisdictional and Related Matters . . . . . . . . . . . . . . 46
SECTION 19. Limitation on Recourse . . . . . . . . . . . . . . . . . . . . 47
SECTION 20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 21. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 22. Reliance of Liquidity Provider . . . . . . . . . . . . . . . . 48
SECTION 23. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 24. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 50
</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
Exhibit E Form of Opinions of Paul, Hastings, Janofsky & Walker LLP and
Milbank, Tweed, Hadley & McCloy addressed to Parent
Guarantor
Exhibit F Form of Opinions of Paul, Hastings, Janofsky & Walker LLP and
Milbank, Tweed, Hadley & McCloy addressed to Lessee
- 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) [___________________], (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 Indenture Trustee entered
into the Trust Indenture and Security Agreement [GPA 1991 AWA-E1], dated as of
September 21, 1990, as supplemented by Trust Indenture Supplement No. 1 dated
<PAGE> 5
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 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 September 21,
1990, as supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 1 dated
September 28, 1990 (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");
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,
-2-
<PAGE> 6
the "Sublessee") entered into the Engine Sublease Agreement [GPA 1991 AWA-E1]
dated as of December 12, 1990, as supplemented by Sublease Supplement No. 1
[GPA 1991 AWA-E1] dated February 8, 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 Original
Lease, 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 Original
Lease, 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 Assumption 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 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");
-3-
<PAGE> 7
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;
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:
-4-
<PAGE> 8
(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 Amended and Restated
Indenture and the Operative Documents (as defined in the Amended and
Restated Indenture) payable on the Restatement Date under Section 2.12 of
the Amended and Restated 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;
(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
-5-
<PAGE> 9
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, terminating certain
rights which the Parent Guarantor has to "put" the engine to the Lessee
and the obligation of the Lessee to accept and lease such engine (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); 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 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.
-6-
<PAGE> 10
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 Trustee shall have received executed
counterparts of items (1) through (7):
(1) this Agreement;
(2) Lease Amendment No. 1, the Lease and Lease Supplement No.
2;
(3) Trust Supplement No. 2;
-7-
<PAGE> 11
(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;
(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 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.
-8-
<PAGE> 12
(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, 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");
(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 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
-9-
<PAGE> 13
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).
(g) The Pass Through Trustee, the Indenture Trustee and the Owner
Trustee each shall have received the following:
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(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 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.
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(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 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.
(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
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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 Head 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
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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 such other documents
and evidence with respect to each other party hereto as the Owner
Participant or its counsel may 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.
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 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;
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(6) the Deed of Indemnity;
(7) the Underwriting Agreement; and
(8) Uniform Commercial Code termination statements relating to
the Original Head Lessee executed by the Owner Trustee.
(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) 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
substantially the form of Exhibit E attached hereto; 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, the taking of all necessary action in
connection therewith and compliance with the conditions herein 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:
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(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; and
(8) Uniform Commercial Code termination statements relating to
the Sublease executed by the Original Head Lessee.
(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(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
substantially the form of Exhibit F attached hereto.
(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
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contemplated by this Agreement, the taking of all necessary action in
connection therewith and compliance with the conditions herein 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 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.
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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 from 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, the Parent Guarantor, 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 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 not 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 indebtedness or
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
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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 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 with respect to the Engine
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 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;
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(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 Lease, Lease Supplement No. 2, Trust Supplement No.
2, the First Amended and Restated Indenture and Indenture Supplement No.
2, 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 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 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 or advisable, 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
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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 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;
(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
Engine;
(p) the Lessee is not a "national" of any foreign country designated
in Executive Order No. 8389, as amended, or of any "designated enemy
country" as defined in Executive Order 9193, as amended, of the President
of the United States, within the meaning of said Executive Orders, as
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amended, or of any regulations, interpretations or rulings issued
thereunder, or 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,
including, without limitation, the financial statements contained in the
Registration Statement, 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 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
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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 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 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 Engine 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, Lease Amendment No. 1 and the Lease.
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(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 this Agreement and Trust
Supplement No. 2, 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 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 Trust Supplement No. 2, and (assuming the due authorization,
execution and delivery of Trust Supplement No. 2 by the Owner
Participant) this Agreement and the Trust Agreement constitutes, and
the Indenture and the Lease, when entered into, will constitute, a
legal, valid and binding obligation of the 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;
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(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;
(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
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<PAGE> 29
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 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
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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 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 and the Amended and Restated Head
Lease TIA; this Agreement and Trust Supplement No. 2 have been duly
authorized, executed and delivered by it; and this Agreement, the
Trust 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 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;
(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
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<PAGE> 31
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);
(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 or the 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, any Person; 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; and
(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).
(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;
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(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 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
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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 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;
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(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
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
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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 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
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<PAGE> 36
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:
(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 and the Amended and Restated Sublease TIA
(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
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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 Engine and
each Part shall be free and clear of any and all Sublessor's Liens
(as defined in the Sublease) and after the Restatement Date the Trust
Estate, the Engine and each Part shall be free and clear of any Lien
or disposition of title created by or through Original Head Lessee,
Parent Guarantor or any Affiliate of either thereof; and
(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.
(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
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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 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 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
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(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.
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
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, or a corporation with a net worth of 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
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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) [Reserved];
(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;
(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,
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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;
(x) the terms of the Operative Documents and the Amended and
Restated Head Lease TIA shall not be altered; and
(xi) such Transferee shall agree that Lessee and Original Head
Lessee shall have no greater liability to such Transferee under the
Operative Documents (other than under Section 10 of the Lease) than Lessee
or Original Head Lessee would have had to Owner Participant on the date of
the transfer to the Transferee.
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.
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.
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
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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 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 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
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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 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 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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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, and (iii) not to terminate or revoke the
Trust Agreement except in accordance with the terms thereof.
(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
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to the provisions of the Amended and Restated Head Lease TIA, unless any and
all Persons entitled to indemnification pursuant to such 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 Section [-] of 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
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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] [on an after tax basis] [(subject to the
exclusions set forth in Section 10(b) of the Lease [and Section [-] of the
Amended and Restated Sublease TIA])] from and against any Taxes that would not
have been imposed in the absence of 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.
(e) The Original Head Lessee and the Parent Guarantor jointly and
severally covenants that after the Restatement Date the Trust Estate, the
Engine and each Part shall be free and clear of any 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.
SECTION 15. Certain Retained Rights and Releases. (a) Each of Owner
Trustee, Indenture Trustee and Owner Participant hereby agrees to and confirms
that they are bound by
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the assignments, delegations, releases and amendments set forth in or
contemplated by Lease Amendment No. 1.
(b) Each of Parent Guarantor, Original Head Lessee and Lessee agree
as amongst themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities, [together with
the rights and obligations under Section 15(c) below,] are, collectively, the
"Retained Sublease Rights and Obligations"), shall survive the termination of
the Sublease: (i) Original Head Lessee and Parent Guarantor shall retain all
rights and benefits, and Sublessee shall remain liable for all of its
obligations, under Sections 10 and 13 of the Sublease with respect to the
period [on or] prior to 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 on or after the Restatement Date under the Sublease in
respect of the period prior to, or acts or omissions or circumstances arising
prior to, the Restatement Date), (ii) all rights, benefits, obligations and
liabilities under the Sublease TIA and (iii) Original Head Lessee 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, if any, in existence on the Restatement Date.
(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: Owner Trustee, Owner
Participant and the other Indemnitees (as such term is defined in the Sublease)
shall retain all rights and benefits, and Sublessee shall remain liable for all
of its obligations under Section[s 10 and] 13 of the Sublease with respect to
the period on or prior to 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 its 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
prior to, or acts or omissions or circumstances arising prior to, [or on] 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
Section[s 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).
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(d) 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 Lease) (as in effect immediately prior
to 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 that all rights, benefits,
obligations and liabilities under Sections 7(c) and 7(d) of the Participation
Agreement with respect to the period [on or] prior to 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 on or after the Restatement Date under the
Participation Agreement in respect of the period prior to, or acts or omissions
or circumstances arising prior to, [or on] the Restatement Date) shall survive
the termination of the Participation Agreement, the Original Lease and the
Parent Head Lease Guaranty, all of which rights, benefits, obligations and
liabilities shall expressly survive the termination of the Participation
Agreement (the foregoing 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
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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,
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,
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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
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
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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.
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. Provided that the transactions
contemplated hereby have been consummated, and
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<PAGE> 52
except as otherwise provided for herein, the representations, warranties and
agreements herein of the Original Lessee, the Parent Guarantor, the Lessee, the
Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination
Agent and the Pass Through Trustee, and the Original Lessee's, the Parent
Guarantor's, the Lessee's, the Owner Trustee's, the Indenture Trustee's, the
Owner Participant's, the Subordination Agent's and the Pass Through Trustee's
obligations under any and all thereof, shall survive the expiration or other
termination 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 [other] party hereto [affected
thereby]; 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 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 such Person be given notice shall be of
no further force and effect.
(c) The Lessee agrees for the express benefit of each 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,
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<PAGE> 53
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.
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<PAGE> 54
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> 55
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
[Owner Participant]
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> 56
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> 57
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc. and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1A, dated November __, 1996.
2. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc. and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1B, dated November __, 1996.
3. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc. and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1C, dated November __, 1996.
4. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc. and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1D, dated November __, 1996.
5. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc. and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1E, dated November __, 1996.
<PAGE> 58
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
Interest Rate Principal Purchase
Pass Through Trusts and Maturity Amount Price
- ------------------- ------------- ------ -----
<PAGE> 59
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
<PAGE> 60
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 __, 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 Amended and Restated Head
<PAGE> 61
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 set-off 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.
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<PAGE> 62
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.
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<PAGE> 63
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 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
-4-
<PAGE> 64
(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.
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 lien on any of the properties or revenues of the
Guarantor pursuant to any requirement of law or contractual obligation of
the Guarantor;
-5-
<PAGE> 65
(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 a bank, trust company or other like regulated
financial institution, or a corporation 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
-6-
<PAGE> 66
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> 67
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> 68
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 __, 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 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> 69
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
-2-
<PAGE> 70
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) [reserved];
(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 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> 71
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> 72
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> 73
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
<PAGE> 1
EXHIBIT 4.20
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 __, 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 September 22, 1989
Amended and Restated as of October 1, 1991
And Further Amended and Restated as of November __, 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 September 22, 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
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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----
<S> <C>
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) Place of Delivery and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(m) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <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) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(b) Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(c) Covered Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(d) Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(e) After-Tax Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(f) Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(g) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(h) Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(i) Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(j) Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(k) Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 11. Loss, Damage and Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(a) Event of Loss with Respect to the Airframe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(b) Event of Loss with Respect to an Engine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(c) Conveyance of Replacement Airframe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(d) Application of Proceeds and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(e) Requisition for Use by Government with Respect to the Aircraft . . . . . . . . . . . . . . . . . . . . . 69
(f) Application in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(a) Public Liability and Property Damage Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(b) Insurance Against Loss or Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(c) Application of Insurance Proceeds for an Event of Loss . . . . . . . . . . . . . . . . . . . . . . . . . 75
(d) Application of Insurance Proceeds for Other than an Event of Loss . . . . . . . . . . . . . . . . . . . . 76
(e) Application in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(f) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(g) Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(h) Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(i) Amounts Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(j) After the Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
(k) Governmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 13. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 14. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 15. Protection of Title and Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 16. Return of Aircraft and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
(a) Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
(b) Status Upon Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
(c) Engines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
(d) Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
(e) Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
(f) Final Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
(g) Aircraft Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
(h) Corrections and Subsequent Corrections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
(i) Functional Flight Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
(j) Export Certificate of Airworthiness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(k) Service Bulletin and Modification Kits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(l) Storage Upon Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(m) Resale/Release Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 17. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 18. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 19. Alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(a) Lessor Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(b) Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 20. Renewal Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
(a) Severability, Amendment, and Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
(b) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
(d) Lessor's Right to Perform for Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
(f) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
(g) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
(h) Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
(i) Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
(j) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
(k) Federal Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
(l) U.S. Registration Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens; Waiver of Jury Trial . . 108
(n) Limitation on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
(o) Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
(p) Article 2-A of the UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
</TABLE>
(iii)
<PAGE> 5
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 G - Opinion of Lessee's Special Counsel
(iv)
<PAGE> 6
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 __, 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 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 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 "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,"
"Trust Company" and "Trust Indenture Estate" shall have the meanings specified
in the Indenture and 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).
<PAGE> 7
"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 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,
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<PAGE> 8
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 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
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<PAGE> 9
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).
"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> 10
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 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.
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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 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.
"Delivery Location" shall mean the location for the delivery
of the Aircraft specified in Exhibit C.
"$" 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
(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.
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"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 include
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
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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 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, the Trust Agreement, each Trust Supplement, the Indenture,
each Indenture Supplement,
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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.
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"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 Original Head Lessee, the Trust Estate, Parent, 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 __, 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" mean (i) with respect to the portion of any
payment of Rent that may be required by the
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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, regulation,
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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"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> 18
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; (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 or 19 (except Liens resulting from a transfer not permitted by
such Section) of this Lease or pursuant to Section 8(n) of the Participation
Agreement, pursuant to Section 10 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 hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program
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<PAGE> 19
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 Financing Documents, and any
other agreement, document or
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<PAGE> 20
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
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.
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<PAGE> 21
"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 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
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<PAGE> 22
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.
"Restricted Use Period" shall have the meaning specified in
Exhibit C.
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<PAGE> 23
"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
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
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<PAGE> 24
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 any Indenture Trustee in
respect of fees or expenses as provided in the [Indenture and/or] the Refunding
Agreement, 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 and/or the Refunding 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
payable by Owner Trustee pursuant to Section 2.02 of the Indenture in respect
of the amount referred to as Net Interest and Related Charges (as defined
therein) referred to therein; 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
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<PAGE> 25
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 Indenture (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 November __, 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.
"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> 26
"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 December 22, 1989 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 and conforming the references therein 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> 27
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) Place of Delivery and Acceptance. The Aircraft was
delivered to and accepted by Lessee at the Delivery Location.
(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
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<PAGE> 28
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 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 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 as Indenture Trustee may direct by thirty (30) days prior
written notice to Lessee,
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<PAGE> 29
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
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,
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<PAGE> 30
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, 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.
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<PAGE> 31
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 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
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<PAGE> 32
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 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
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<PAGE> 33
(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 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:
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<PAGE> 34
(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
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
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<PAGE> 35
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 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;
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<PAGE> 36
(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 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;
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<PAGE> 37
(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 Lessor 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
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<PAGE> 38
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 requests, provided,
however, that no sublease shall
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<PAGE> 39
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 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
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<PAGE> 40
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 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
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<PAGE> 41
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
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
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<PAGE> 42
by, or substantially equivalent to those required by, the central civil
aviation authority of the country of registry and, to the extent not
inconsistent with the FAA or the central civil aviation authority of Canada,
France, Germany, the Netherlands or the United Kingdom, 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 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
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<PAGE> 43
("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 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
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<PAGE> 44
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 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
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<PAGE> 45
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;
(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
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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 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
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<PAGE> 47
(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 (if such
acquisition is analogous in purpose or effect to a consolidation or merger) of
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
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<PAGE> 48
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
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
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<PAGE> 49
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
Community 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 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
and, thereafter, the immediately preceding 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
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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 the next six (6) years (or such other 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), 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 the immediately preceding
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 the next six (6) years (or such other 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.
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<PAGE> 52
(l) Letter of Credit. (X) 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
$1,000,000, 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 (i) its statement that it
believes 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 [thirty]
(30)] 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 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 (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 or apply (including, without
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<PAGE> 53
limitation, by way of set off against) same or such amounts thereof as it may
elect 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 unless and until the Lien of the Indenture shall have been
discharged in accordance with the provisions of Section 10.06 thereof, Lessor
may apply (whether by way of set-off or otherwise) the amounts drawn under the
Letter of Credit solely to amounts that if received by Indenture Trustee would
then be distributable under the Indenture to Lessor or Owner Participant; and
provided, however, that neither the amount offset at any one time nor the
aggregate amount offset 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 then required to be paid on account of the principal of and any
interest on the Equipment Notes or otherwise owing to a Note Holder or other
Person under the Indenture (other than to Lessor or Owner Participant).
(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> 54
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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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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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 Rent 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 Rent, Lessee shall pay an
additional amount of Rent such that the net amount actually received by each
Indemnitee, after such deduction or withholding, will be equal to all such
amounts that would be received by such Indemnitee if no such deduction or
withholding had been required. If Lessee pays any withholding Tax to any
Indemnitee (or to any taxing authority for the account of any such Indemnitee)
as a result of the application of the preceding sentence with respect to any
withholding Tax which is an excluded tax in respect of such Indemnitee pursuant
to Section 10(b), then such Indemnitee (or, in the case of Taxes imposed on the
Owner Trustee, the Owner Participant to the extent the exclusion pursuant to
Section 10(b) is by
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reason of the place of organization or business, or activities of, or is
otherwise attributable to, the Owner Participant or any of its related
Indemnitees (other than the Owner Trustee)), 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. Except as provided in Section 10(b), 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 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),
(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,
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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,
(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, Covered Income Taxes described in
subsection (c) of this Section 10, 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,
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(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 (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) 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), 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,
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(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, and
(ix) In the case of the Indenture Trustee, 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.
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 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 clauses (i) and (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
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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 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 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 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
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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
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,
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(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 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,
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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 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
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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 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 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),
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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 (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.
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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 (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 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
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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); (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 Lessee's election, with (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; and (ix) furnish the appraisal referred to above. 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, Head 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
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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
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) 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
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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; and (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. 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 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
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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 and such Engines or engines on such date or provide a replacement
Aircraft and Engine on such date in the
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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
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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 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
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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 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
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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. 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
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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 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
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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
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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 "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
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loss or other claim where as provided by the Amended and Restated Aircraft
Lease Agreement dated as of September 22, 1990 as amended and restated as of
November __, 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.
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(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 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,
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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 (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 the beginning of the Term (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
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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 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,
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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) or
the 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 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
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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, (vii) or 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
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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 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 Original Head
Lessee's Liens (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment), Lenders' Liens
and Liens arising out of the Financing Documents; (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
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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
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,
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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, Foreign Lessor or Indenture
Trustee, 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 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 or Indenture Trustee 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 Owner Participant or Indenture Trustee
may
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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.
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
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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 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
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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, 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
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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.
(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
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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 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
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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 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
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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 paid all costs and expenses for such parking,
storage and insurance.
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(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 to pay any amount owed by
Lessee under the Tax Indemnification Agreement or 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 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
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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 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
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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
(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
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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 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.
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(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 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
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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 all unpaid Rent before, during or after the exercise of any
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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
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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) or (e)
above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with
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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 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
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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 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
- 103 -
<PAGE> 109
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 Values (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, [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
- 104 -
<PAGE> 110
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 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
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<PAGE> 111
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
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
- 106 -
<PAGE> 112
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 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
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<PAGE> 113
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 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. [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, 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.
[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] in writing to Lessor or
Lessee, Foreign Lessor, Owner Participant and Indenture Trustee. [Each of]
Lessee [and Lessor] hereby agrees that
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<PAGE> 114
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],
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. 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.
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<PAGE> 115
(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 (and as otherwise extended, amended,
modified, renewed or supplemented) shall be governed by Article 2-A of the
Uniform Commercial Code of New York.
- 110 -
<PAGE> 116
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:
- 111 -
<PAGE> 117
ANNEX I
to
Second Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
Aircraft Lease Agreement [GPA 1989 BN-6] dated as of September 28, 1989 between
Wilmington Trust Company, as trustee under Trust Agreement [GPA 1989 BN-6]
dated as of December 15, 1989, as amended, as lessor, and GPA Leasing USA Sub
I, Inc., as lessee, which was recorded by the Federal Aviation Administration
on September 29, 1989 and assigned Conveyance No. G75383, 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>
<PAGE> 118
EXHIBIT A
to
Second Amended and Restated Aircraft Lease Agreement
STIPULATED LOSS VALUES
The Stipulated Loss Value of the Aircraft leased hereunder during the Term
shall be determined as of the date provided in the Lease and shall be an amount
equal to the amount shown below as of the applicable date set forth below.
Stipulated Loss
Value Date
A
<PAGE> 119
EXHIBIT B
to
Second Amended and Restated Aircraft Lease Agreement
AIRCRAFT RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee)
of each of the following:
A. CERTIFICATES
1. Certificate of Airworthiness (FAA)
2. Lessee to supply Radio License
2a. Certificate of Sanitary Construction
B. AIRCRAFT STATUS RECORDS
3. Log Book (currently on Aircraft)
4. Airframe Maintenance Status (with time-to-go or time
since last)
5. Airworthiness Directive Compliance Report
6. Modification Status report
7. Weighing Report (most recent)
8. Accident and incident report
9. List of Life Limited Components (with time-to-go)
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance visits)
10. Test Flight Reports
11. Job Cards and Work Accomplishment Documents (copies)
12. X-ray pictures (most recent)
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
B
<PAGE> 120
15. Mechanical Interruption Summary
E. ENGINE RECORDS (for each engine)
16. Last overhaul and repair documents
17. Airworthiness Directive Compliance Report
18. List of Life Limited Components
19. Modification Status Report
F. APU RECORDS
20. Last Overhaul and Repair Documents
21. Airworthiness Directive Compliance Report
22. List of Life Limited Components
23. Modification Status Report
G. COMPONENT RECORDS
24. Component records maintained in accordance with a
record keeping policy approved by and acceptable to
the FAA to certify the status and maintenance
histories of the components
H. MANUALS
25. Approved Flight Manual
26. Flight Crew Operating Manual
27. Weight and Balance Manual
28. Wiring Diagram Manual
29. Illustrated Parts Catalog
I. MISCELLANEOUS TECHNICAL DOCUMENTS
30. Operations Specification
31. Passenger Cabin Configuration Drawings
J. Any other documents, manuals, reports or related information
delivered with or related to the Aircraft, updated as may be
required to reflect the current aircraft status.
B
<PAGE> 121
EXHIBIT C
to
Second Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the
Lease, Basic Rent shall be payable in semi-annual
installments, each of which shall be in an amount equal
to the amount, and in advance, as set forth in Schedule
I hereto.
Basic Rent
Payment Date: Each such date set forth as such on Schedule I hereto.
Delivery
Location: Toulouse, France.
Manufacturer: Airbus Industrie
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in the
Original Head Lease Tax Indemnification Agreement.
Payment Location: So long as the Lien of the Indenture shall remain
in effect, Citibank, N.A., 399 Park Avenue, New
York, NY for the account of The Chase Manhattan
Bank, as successor in interest to Manufacturers
Hanover Trust Company, Account No. _____ and
thereafter (and at all times with respect to
Excepted Payments) _____, for the account of _____
Account No. _____.
Renewal Rent: During the Renewal Term of the Lease, Renewal Rent shall
be payable in installments, semi-annually in advance.
Renewal Rent
Payment Date: The same day and month during each year of the Renewal
Term on which Basic Rent was due (the Basic Rent
Payment Dates). If a Renewal Rent Payment Date shall
fall on a day which is not a Business Day, any
C
<PAGE> 122
payment due on such Renewal Rent Payment Date shall be
made on the next succeeding Business Day.
Restricted Use
Period: On and after the Delivery Date until and including the
last day of the Owner Participant's seventh full
fiscal year after the Delivery Date.
Lease
Identification: A fireproof metal plate bearing the following legend:
"Title to this Aircraft is held by Wilmington
Trust Company, not in its individual capacity but solely
as Owner Trustee, as Lessor, which is the registered
owner thereof on the U.S. FAA Aircraft Registry, and
which has leased this Aircraft to America West Airlines,
Inc., as Lessee" and, for so long as the Lien of the
Indenture shall not have been discharged, bearing the
following additional legend: "Mortgaged to The Chase
Manhattan Bank as Indenture Trustee."
Lessee's
Address: America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (602) 693-5990
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Rodney Square North
Wilmington, DE 19890
Telecopier: ( )
Attention:
C
<PAGE> 123
EXHIBIT D-1
to
Second Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT NO. 3, dated November __, 1996, between
WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual
capacity but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-6]
dated as of September 22, 1989, as amended and supplemented to the date hereof
(together with its successors and assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation (together with its successors,
"Lessee").
Lessor and Lessee have heretofore entered into that certain
Second Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-6] dated as
of September 22, 1989, as Amended and Restated as of October 1, 1991, and as
further Amended and Restated as of November __, 1996 (as further amended,
supplemented or otherwise modified from time to time, herein called the "Lease
Agreement," and the defined terms therein being hereinafter used with the same
meaning) and that certain Lease Supplement [GPA 1989 BN-6] No. 1 dated December
22, 1989 ("Lease Supplement No. 1") and Lease Supplement [GPA 1989 BN-6] No. 2
dated October 24, 1991 ("Lease Supplement No. 2"). The Lease Agreement
provides for the execution and delivery from time to time of a Lease Supplement
substantially in the form hereof for the purpose of leasing the aircraft
described below (or confirming the leasing of the aircraft described below)
under the Lease Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease Agreement relates to the aircraft, parts and engines
described below, and a counterpart of the Lease Agreement is attached hereto
and made a part hereof, and this Lease Supplement, together with such
attachment, is being filed for recordation on the date hereof with the FAA as
one document.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has delivered and leased to
Lessee under the Lease Agreement on December 22, 1989 as evidenced by Lease
Supplement No. 1, and Lessee hereby confirms that it has accepted and leased
from Lessor
D-1
<PAGE> 124
under the Lease Agreement on December 22, 1989 as evidenced by Lease Supplement
No. 1, that certain Airbus Model A320-231 commercial jet aircraft airframe and
two IAE V2500 engines (each of which Engines has 750 or more rated takeoff
horsepower or the equivalent of such horsepower) described in Schedule 1 hereto
(the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is December
22, 1989.
3. The Basic Term for the Delivered Aircraft shall commence
on the Delivery Date and shall end on the Expiration Date, which shall be July
2, 2013 unless the Lease is extended or terminated prior thereto in accordance
with the terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay
Rent (as defined in the Lease Agreement) in the amounts and at the times
provided in the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(e) of the Lease Agreement, and
(ii) Lessee has accepted the Delivered Aircraft for all purposes of Lease
Supplement No. 1 as further supplemented by Lease Supplement No. 2, hereof and
of the Lease Agreement, and the Delivered Aircraft is (A) as far as Lessee
reasonably ascertained from the acceptance procedures provided for in the
Purchase Agreement airworthy, in accordance with specifications, and in good
working order and repair, it being understood that Lessee by this confirmation
is not giving any warranty of any kind with respect to the Aircraft, and (B)
free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing law, are hereby incorporated by
reference in this Lease Supplement No. 3 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 3 may be executed in any number
of counterparts; each of such counterparts, except as provided in Section 21(e)
of the Lease Agreement, shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is
D-1
<PAGE> 125
defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction), no security interest in this Lease Supplement may be created
except by the transfer or possession of the counterpart containing the printed
receipt therefor executed by Indenture Trustee on the signature page hereof.
D-1
<PAGE> 126
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 3 to be duly executed 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:
D-1
<PAGE> 127
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this _______ day of November
__, 1996 and consents to the terms hereof.
THE CHASE MANHATTAN BANK, AS
SUCCESSOR IN INTEREST TO
MANUFACTURERS HANOVER TRUST COMPANY,
not in its individual capacity, but
solely as Indenture Trustee
By:
-------------------------------
Title:
----------------------------
D-1
<PAGE> 128
SCHEDULE 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers Serial No.
N626AW 65
Installed
IAE
Engines
Model No. Serial No.
V2500 V0090
V2500 V0093
D-1
<PAGE> 129
EXHIBIT D-2
to
Second Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-2
<PAGE> 130
EXHIBIT E
to
Second Amended and Restated Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Aircraft, Lessee, at its own
cost and expense, shall return the Aircraft in compliance with the following:
(1) The Aircraft shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Aircraft as if such Aircraft were owned and were to have been kept in
continued regular service by Lessee, without discrimination as to any other
similar aircraft owned or leased by Lessee.
(2) The Aircraft shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Aircraft
as are permitted under this Lease.
(3) The Aircraft shall have installed the full complement of
Engines (as used herein the term "Engines" includes engines for which title
will be transferred to Lessor pursuant to Section 16(c)) and other equipment,
parts, components, accessories, and loose equipment subleased hereunder or
substituted therefor, each such item functioning in accordance with its
intended use.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Aircraft previously deactivated by Lessee and shall assure
each such system is properly functioning for its intended use.
(5) Each Engine shall have just completed a hot and cold
section baroscope and/or radiographic isotope inspection by Lessor (at Lessee's
cost and expense) of the low and high pressure compressors and turbine area,
and shall have just completed engine condition runs, and any discrepancies
detected shall be corrected at Lessee's cost and expense in accordance with the
Manufacturer's maintenance policies and procedures.
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike manner from the Aircraft and the
Aircraft shall have been
E
<PAGE> 131
repainted in a good and workmanlike manner in the livery specified by Lessor.
(7) The Aircraft shall have simultaneously with such return
completed a "block 'C' Check" or the equivalent level designated check or
checks (inclusive of all phases of a "block 'C' Check" or equivalent level
designated check if the Maintenance Program is a "phase" program), in
accordance with Lessee's Maintenance Program such that all inspections and
airworthiness directives having terminating actions due within the next "block
'C' Check" or equivalent level designated check(s), and all other actions as
per the Manufacturer's minimum recommendations in its then current maintenance
planning document for such check or checks, shall have been accomplished
immediately prior to redelivery.
(8) Neither the Aircraft nor any Engine shall have any
scheduled or unscheduled open or deferred maintenance items or placards.
(9) No Engine shall be on "Watch" and each Engine shall comply
with Lessee's Maintenance Program without waiver, deviations or exceptions.
(10) Each landing gear assembly shall have no less than 50% of
allowable hours or cycles, whichever is the more limiting factor, under
Lessee's Maintenance Program, remaining until the next scheduled overhaul or
replacement.
(11) Each Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, and each Engine shall have not more than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, since the last engine compressor
refurbishment, and each Engine shall have not more than 2,500 hours or 2,500
cycles, whichever is the more limiting factor, since its last turbine
restoration, based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
E
<PAGE> 132
(12) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(13) The Airframe shall be returned to Lessor with not less
than fifty percent (50%) of the total scheduled period between scheduled Major
Structural Inspections of the most comprehensive type (currently referred to as
an "eight year" heavy structural inspection" or "8C" inspection under the
Manufacturer's maintenance planning document in effect on the date hereof) with
respect to allowable hours, cycles or calendar months, whichever is the more
limiting factor, remaining until the next scheduled Major Structural Inspection
of the most comprehensive type, including, without limitation, the replacement
of any safe-life limited parts, required in accordance with the Lessee's then
current Maintenance Program or the Manufacturer's mandatory life limits and,
therefore, at a minimum, having just completed a "four-year heavy structural
inspection" or "4C" inspection as referred to in the Manufacturer's maintenance
planning document in effect on the date hereof.
(14) All software associated with or relating to any on-board
avionic equipment must be delivered to Lessor and be in a condition complying
with the Manufacturer's then recommended standards.
E
<PAGE> 133
EXHIBIT F-1
to
Second Amended and Restated Aircraft Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Cathay Pacific
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German
Airlines)
Finnair Oy
Iberia
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart
Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Toa Domestic Airlines - TDA
Union Des Transports Aeriens
Varig S.A. (Viacao Aerea Rio-Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose the deletion
of particular airlines from the above list of Foreign Air Carriers (as the same
may be amended pursuant to this provision) based upon Lessor's reasonable
judgment. Lessee may at any time, by written notice to Lessor, propose the
addition of particular airlines to such list of Foreign Air Carriers based upon
Lessee's reasonable judgment and which are comparable to the above airlines.
(b) If Lessee has not objected in writing to the deletion of a particular
airline proposed by Lessor as provided in paragraph (a) of this Exhibit, or if
Lessor has not objected
F-1
<PAGE> 134
in writing to the addition of a particular airline proposed by Lessee as
provided in paragraph (a), in each case within thirty (30) days after receipt
of notice of such proposal, the list of Foreign Air Carriers shall be deemed
amended without further act to delete or add such airline. If Lessee or Lessor
delivers a timely objection in writing to a proposal made by the other pursuant
to paragraph (a), each party agrees to consult promptly at the request of the
other in a good-faith effort to resolve the disagreement through negotiation;
provided, however, that an airline which Lessor has proposed to delete shall be
deleted from such list if there will be at least twenty (20) or such lesser
number as Lessor and Lessee shall reasonably determine, if the number of
airlines of a type similar to the airlines listed above which may be included
within the definition of Foreign Air Carriers is substantially reduced as a
result of consolidation in the airline industry other airlines remaining on
such list after giving effect to such deletion and any other deletions then
proposed by Lessor.
(c) Notwithstanding any other provision hereof, no addition shall be made, and
an airline shall be deleted from such list if, such airline would not be
permitted to be a lessee under the provisions of the Lease, and no deletion of
an airline from the list of Foreign Air Carriers pursuant to this Exhibit shall
affect any existing sublease or other agreement providing for transfer of
possession of the Aircraft, the Airframe or any Engine or Part which was
permitted under the Lease at the time entered into, or preclude any subsequent
renewal or extension of such sublease or other agreement.
F-1
<PAGE> 135
EXHIBIT F-2
to
Second Amended and Restated Aircraft Lease Agreement
PERMITTED FOREIGN SUBLESSEE DOMICILES
<TABLE>
<S> <C>
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Hong Kong Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
</TABLE>
- ------------------------
* So long as on the date of entering into the proposed sublease such
country and the United States have diplomatic relations at least as
good as those in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee, propose the deletion
of a particular country from the above list of Permitted Foreign Sublessee
Domiciles (as the same may be amended pursuant to this provision) based upon
Lessor's reasonable judgment. Lessee may at any time, by written notice to
Lessor, propose the addition of particular countries which are comparable to
the above countries to such list of Permitted Foreign Sublessee Domiciles based
upon Lessee's reasonable judgment.
(b) If Lessee has not objected in writing to the deletion of a particular
country proposed by Lessor as provided in
F-2
<PAGE> 136
paragraph (a) of this Exhibit, or if Lessor has not objected in writing to the
addition of a particular country proposed by Lessee as provided in paragraph
(a), in each case within thirty (30) days after receipt of notice of such
proposal, the list of Permitted Foreign Sublessee Domiciles shall be deemed
amended without further act to delete or add such country. If Lessee or Lessor
delivers a timely objection in writing to a proposal made by the other pursuant
to paragraph (a), each party agrees to consult promptly at the request of the
other in a good-faith effort to resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, no deletion of a country from
the list of Permitted Foreign Sublessee Domiciles pursuant to this Exhibit
shall affect any existing sublease or other agreement providing for transfer of
possession of the Aircraft, the Airframe or any Engine or Part which was
permitted under the Lease at the time entered into, or preclude any subsequent
renewal or extension of such sublease or other agreement.
F-2
<PAGE> 137
EXHIBIT G
to
Second Amended and Restated Aircraft Lease Agreement
OPINION OF LESSEE'S SPECIAL COUNSEL
G
<PAGE> 1
EXHIBIT 4.21
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 __, 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 __, 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
<PAGE> 2
TABLE OF CONTENTS
Page
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) Place of Delivery and Acceptance............................. 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.................................... 34
(d) Maintenance.................................................. 35
(e) Registration and Insignia.................................... 37
Section 7. Inspection................................................ 38
Section 8. Additional Covenants of Lessee............................ 38
(a) Financial Information........................................ 38
(b) Maintenance of Corporate Existence........................... 41
(c) Maintenance of Status........................................ 41
(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
<PAGE> 3
Page
(i) Section 1110................................................. 44
(j) Permits and Licenses......................................... 45
(k) Security Opinion; Annual Certificate......................... 45
(m) ERISA........................................................ 48
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) Indemnity................................................... 53
(b) Exclusions.................................................. 55
(c) Covered Income Tax.......................................... 56
(d) Reports and Returns......................................... 57
(e) After-Tax Basis............................................. 58
(f) Tax Benefit................................................. 58
(g) Payment..................................................... 58
(h) Contest..................................................... 59
(i) Refund...................................................... 61
(j) Diligence................................................... 61
(k) Affiliated Group............................................ 61
Section 11. Loss, Damage and Requisition............................. 62
(a) Event of Loss with Respect to the Airframe................... 62
(b) Event of Loss with Respect to an Engine...................... 64
(c) Conveyance of Replacement Airframe........................... 65
(d) Application of Proceeds and Payments......................... 67
(e) Requisition for Use by Government with
Respect to the Aircraft................................ 68
(f) Application in Default....................................... 69
Section 12. Insurance................................................ 69
(a) Public Liability and Property Damage Insurance. ............. 69
(b) Insurance Against Loss or Damage............................. 71
(c) Application of Insurance Proceeds for an
Event of Loss.......................................... 74
(d) Application of Insurance Proceeds for Other
than an Event of Loss.................................. 74
(e) Application in Default....................................... 75
(f) Certificates................................................. 76
(g) Reinsurance.................................................. 76
(h) Storage...................................................... 77
(i) Amounts Held................................................. 77
(j) After the Term............................................... 77
ii
<PAGE> 4
Page
(k) Governmental Indemnity....................................... 78
Section 13. General Indemnity........................................ 78
Section 14. Liens.................................................... 83
Section 15. Protection of Title and Further Assurances............... 85
Section 16. Return of Aircraft and Records........................... 86
(a) Return....................................................... 86
(b) Status Upon Return........................................... 87
(c) Engines...................................................... 88
(d) Records and Documents........................................ 88
(e) Condition of Aircraft........................................ 90
(f) Final Inspection............................................. 90
(g) Aircraft Records and Documents............................... 91
(h) Corrections and Subsequent Corrections....................... 91
(i) Functional Flight Check...................................... 92
(j) Export Certificate of Airworthiness.......................... 92
(k) Service Bulletin and Modification Kits....................... 92
(l) Storage Upon Return.......................................... 93
(m) Resale/Release Cooperation................................... 93
Section 17. Events of Default........................................ 93
Section 18. Remedies................................................. 96
Section 19. Alienation...............................................101
(a) Lessor Assignments...........................................101
(b) Security for Obligations.....................................101
Section 20. Renewal Option...........................................103
Section 21. Miscellaneous............................................104
(a) Severability, Amendment, and Construction....................104
(b) GOVERNING LAW................................................104
(c) Notices......................................................105
(d) Lessor's Right to Perform for Lessee.........................105
(e) Counterparts.................................................105
(f) Quiet Enjoyment..............................................105
(g) Brokers......................................................106
(h) Investment of Funds..........................................106
(i) Entire Agreement; Amendment..................................106
(j) Expenses.....................................................107
(k) Federal Bankruptcy Code......................................107
(l) U.S. Registration Number.....................................107
iii
<PAGE> 5
Page
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial...................................107
(n) Limitation on Recourse..................................109
(o) Successor Trustee.......................................109
(p) Article 2-A of the UCC..................................109
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 G - Opinion of Lessee's Special Counsel
iv
<PAGE> 6
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 __, 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 "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",
"Trust Company" and "Trust Indenture Estate" shall have the meanings specified
in the Indenture and 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).
<PAGE> 7
"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 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
-2-
<PAGE> 8
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 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
-3-
<PAGE> 9
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
-4-
<PAGE> 10
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 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.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
-5-
<PAGE> 11
"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.
"Delivery Location" shall mean the location for the
delivery of the Aircraft specified in Exhibit C.
"$" 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.
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"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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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.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Trust Agreement, each Trust Supplement, the Indenture,
each Indenture Supplement,
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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> 15
"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 __, 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> 16
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> 17
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; (iv) claims against the Trust Estate, Trust
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<PAGE> 18
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 or
19 (except Liens resulting from a transfer not permitted by such Section) 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 modifications,
service bulletins, engineering orders,
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<PAGE> 19
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, 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, 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
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<PAGE> 20
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 a Part in accordance with Section 9
hereof, the Part so replaced shall cease to be a Part hereunder.
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<PAGE> 21
"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, document or certificate
delivered or entered into pursuant to the foregoing, as amended, supplemented or
otherwise modified.
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"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 $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.;
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<PAGE> 23
(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.
"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
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<PAGE> 24
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] the Refunding
Agreement 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 and/or the Refunding 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 payable by
Owner Trustee pursuant to Section 2.02 of the Indenture in respect of the amount
referred to as Net Interest and Related Charges (as defined therein) referred to
therein; 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 Lessee and
Lessee, as the same may be amended, supplemented or otherwise modified from time
to time.
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<PAGE> 25
"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.
"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 therein to this Agreement.
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"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) Place of Delivery and Acceptance. The Aircraft was
delivered to and accepted by Lessee at the Delivery Location.
(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
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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 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
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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 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 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
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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.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of
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<PAGE> 30
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 PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE
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<PAGE> 31
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 create, incur, assume or
suffer to exist any Lessor's Lien or Head Lessor's Lien on the Aircraft.
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<PAGE> 32
(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 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
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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
such Engine and not an Event of Default and Lessee shall comply
with Section 11(b) hereof in respect thereof;
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<PAGE> 34
(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 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;
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<PAGE> 35
(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);
(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
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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 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);
(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
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(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 Lessor 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 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
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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
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
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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.
(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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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 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,
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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 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)
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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
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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.
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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(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) 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 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;
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(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
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
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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 (if such
acquisition is analogous in purpose or effect to a consolidation or merger) of
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;
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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 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.
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(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 Community 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 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
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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
and, thereafter, the immediately preceding 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 the next six (6) years (or such other 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
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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 the immediately preceding 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 the
next six (6) years (or such other 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) 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 $1,000,000, 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 (i) its statement that it
believes 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
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expire within [thirty (30)] 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 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 (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 or
apply (including, without limitation, by way of set off against) same or such
amounts thereof as it may elect 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 unless and until the Lien of the Indenture shall have
been discharged in accordance with the provisions of Section 10.06 thereof,
Lessor may apply (whether by way of set-off or otherwise) the amounts drawn
under the Letter of Credit solely to amounts that if received by Indenture
Trustee would then be distributable under the Indenture to Lessor or Owner
Participant; and provided, however, that neither the amount offset at any one
time nor the aggregate amount offset at different times shall reduce the amount
of any installment or payment of Rent (whether upon the
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termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts then required to be paid on account of
the principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder or other Person under the Indenture (other than to Lessor or Owner
Participant).
(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
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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 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
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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) 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
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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 "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,
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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 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
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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 Rent
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 Rent, Lessee shall
pay an additional amount of Rent such that the net amount actually received by
each Indemnitee, after such deduction or withholding, will be equal to all such
amounts that would be received by such Indemnitee if no such deduction or
withholding had been required. If Lessee pays any withholding Tax to any
Indemnitee (or to any taxing authority for the account of any such Indemnitee)
as a result of the application of the preceding sentence with respect to any
withholding Tax which is an excluded tax in respect of such Indemnitee pursuant
to Section 10(b), then such Indemnitee (or, in the case of Taxes imposed on the
Owner Trustee, the Owner Participant to the extent the exclusion pursuant to
Section 10(b) is by reason of the place of organization or business, or
activities of, or is otherwise attributable to, the Owner Participant or any of
its related Indemnitees (other than the Owner Trustee)), 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. Except as provided in Section 10(b),
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
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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 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,
(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, Covered
Income Taxes described in subsection (c) of this Section 10, 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 (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)
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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), 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, and
(ix) In the case of the Indenture Trustee, 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 clauses (i) and
(ii) of subsection (b) of this Section 10, a Covered Income Tax includes:
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(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 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
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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 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
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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
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,
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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 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
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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 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
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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 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
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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 (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,
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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, 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
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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); (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 Lessee's
election, with (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; and (ix) furnish the appraisal
referred to above. 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
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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) 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
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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; and (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. 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
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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 and such Engines
or engines on such date or provide a
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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,
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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 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
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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 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,
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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 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
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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 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
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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.
(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.
(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.
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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 dated as of December 19, 1989 as amended and restated as of November
__, 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 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'
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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 (it being understood that Section 10
hereof and the Tax
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Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to the beginning of the Term (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 connected with injury to or death of personnel of
Lessee or
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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 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 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
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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, (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 or
Indenture Trustee, 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 or Indenture
Trustee may reasonably request. Lessee shall also do or cause to be done, at its
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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 Owner Participant or Indenture Trustee 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
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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 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
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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 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
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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, 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
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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 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
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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
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,
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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 to pay any
amount owed by Lessee under the Tax Indemnification Agreement or 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
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(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 consolidated property, or Lessee admits in
writing its inability to, or is unable to, or does not, pay its debts
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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 Lessee's suspension of its business as
a commercial
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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
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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 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
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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 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
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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) 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,
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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 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 Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
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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 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 Values
(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
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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, [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.
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(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 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
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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, 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
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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.
(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 of any of the transactions contemplated
hereby and thereby may be
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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, 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. [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] in writing to Lessor
or Lessee, 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. 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
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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 (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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<PAGE> 117
ANNEX I
to
Second Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF 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 12/22/89 12/27/89 S86322
[GPA 1989 BN-10]
No. 1
Amended and as of 10/25/91 Q52004
Restated Aircraft 10/01/91
Lease Agreement
[GPA 1989 BN-10]
Lease Supplement 10/24/91 10/25/91 Q52004
[GPA 1989 BN-10]
No. 2
</TABLE>
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<PAGE> 118
EXHIBIT A
to
Second Amended and Restated Aircraft Lease Agreement
STIPULATED LOSS VALUES
The Stipulated Loss Value of the Aircraft leased hereunder during the Term shall
be determined as of the date provided in the Lease and shall be an amount equal
to the amount shown below as of the applicable date set forth below.
Stipulated Loss
Value Date
A
<PAGE> 119
EXHIBIT B
to
Second Amended and Restated Aircraft Lease Agreement
AIRCRAFT RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee) of
each of the following:
A. CERTIFICATES
1. Certificate of Airworthiness (FAA)
2. Lessee to supply Radio License
2a. Certificate of Sanitary Construction
B. AIRCRAFT STATUS RECORDS
3. Log Book (currently on Aircraft)
4. Airframe Maintenance Status (with time-to-go or
time since last)
5. Airworthiness Directive Compliance Report
6. Modification Status report
7. Weighing Report (most recent)
8. Accident and incident report
9. List of Life Limited Components (with
time-to-go)
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance
visits)
10. Test Flight Reports
11. Job Cards and Work Accomplishment Documents
(copies)
12. X-ray pictures (most recent)
B
<PAGE> 120
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
15. Mechanical Interruption Summary
E. ENGINE RECORDS (for each engine)
16. Last overhaul and repair documents
17. Airworthiness Directive Compliance Report
18. List of Life Limited Components
19. Modification Status Report
F. APU RECORDS
20. Last Overhaul and Repair Documents
21. Airworthiness Directive Compliance Report
22. List of Life Limited Components
23. Modification Status Report
G. COMPONENT RECORDS
24. Component records maintained in accordance with
a record keeping policy approved by and
acceptable to the FAA to certify the status and
maintenance histories of the components
H. MANUALS
25. Approved Flight Manual
26. Flight Crew Operating Manual
27. Weight and Balance Manual
28. Wiring Diagram Manual
29. Illustrated Parts Catalog
I. MISCELLANEOUS TECHNICAL DOCUMENTS
30. Operations Specification
31. Passenger Cabin Configuration Drawings
B
<PAGE> 121
J. Any other documents, manuals, reports or related information delivered with
or related to the Aircraft, updated as may be required to reflect the
current aircraft status.
B
<PAGE> 122
EXHIBIT C
to
Second Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the Lease, Basic Rent
shall be payable in semi-annual installments,
each of which shall be in an amount equal to the
amount, and in advance, as set forth in Schedule
I hereto.
Basic Rent
Payment Date: Each such date set forth as such on Schedule I
hereto.
Delivery
Location: Toulouse, France.
Manufacturer: Airbus Industrie
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in the
Original Head Lease Tax Indemnification
Agreement.
Payment Location: So long as the Lien of the Indenture shall remain
in effect, Citibank, N.A., 399 Park Avenue, New
York, NY for the account of The Chase Manhattan
Bank, as successor in interest to Manufacturers
Hanover Trust Company, Account No. _____ and
thereafter (and at all times with respect to
Excepted Payments) _____, for the account of
_____ Account No. _____.
Renewal Rent: During the Renewal Term of the Lease, Renewal
Rent shall be payable in installments,
semi-annually in advance.
Renewal Rent
Payment Date: The same day and month during each year of the
Renewal Term on which Basic Rent was due (the
Basic Rent Payment Dates). If a Renewal Rent
Payment Date shall fall on a
C
<PAGE> 123
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.
Restricted Use
Period: On and after the Delivery Date until and
including the last day of the Owner Participant's
seventh full fiscal year after the Delivery Date.
Lease
Identification: A fireproof metal plate bearing the following
legend: "Title to this Aircraft is held by
Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee, Lessor,
which is the registered owner thereof on the U.S.
FAA Aircraft Registry, and which has leased this
Aircraft to America West Airlines, Inc., as
Lessee" and, for so long as the Lien of the
Indenture shall not have been discharged, bearing
the following additional legend: "Mortgaged to
The Chase Manhattan Bank as Indenture Trustee."
Lessee's
Address: America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (602) 693-5990
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Rodney Square North
Wilmington, DE 19890
Telecopier: ( )
Attention:
C
<PAGE> 124
EXHIBIT D-1
to
Second Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT NO. 3, dated November, 1996, between WILMINGTON
TRUST COMPANY, a Delaware corporation (not in its individual capacity but solely
as Owner Trustee under a Trust Agreement [GPA 1989 BN-10] dated as of December
19, 1989, as amended and supplemented to the date hereof (together with its
successors and assigns, "Lessor"), and AMERICA WEST AIRLINES, INC., a Delaware
corporation (together with its successors, "Lessee").
Lessor and Lessee have heretofore entered into that certain Second
Amended and Restated Aircraft Lease 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 __, 1996 (as further amended, supplemented
or otherwise modified from time to time, herein called the "Lease Agreement",
and the defined terms therein being hereinafter used with the same meaning) and
that certain Lease Supplement [GPA 1989 BN-10] No. 1 dated December 22, 1989
("Lease Supplement No. 1") and Lease Supplement [GPA 1989 BN-10] No. 2 dated
October 24, 1991 ("Lease Supplement No. 2"). The Lease Agreement provides for
the execution and delivery from time to time of a Lease Supplement substantially
in the form hereof for the purpose of leasing the aircraft described below (or
confirming the leasing of the aircraft described below) under the Lease
Agreement as and when delivered by Lessor to Lessee in accordance with the terms
thereof.
The Lease Agreement relates to the aircraft, parts and engines
described below, and a counterpart of the Lease Agreement is attached hereto and
made a part hereof, and this Lease Supplement, together with such attachment, is
being filed for recordation on the date hereof with the FAA as one document.
NOW, THEREFORE, in consideration of the premises and other good
and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has delivered and leased to
Lessee under the Lease Agreement on December 22, 1989 as evidenced by Lease
Supplement No. 1, and Lessee
D-1
<PAGE> 125
hereby confirms that it has accepted and leased from Lessor under the Lease
Agreement on December 22, 1989 as evidenced by Lease Supplement No. 1, that
certain Airbus Model A320-231 commercial jet aircraft airframe and two IAE V2500
engines (each of which Engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower) described in Schedule 1 hereto (the "Delivered
Aircraft").
2. The Delivery Date of the Delivered Aircraft is December 22,
1989.
3. The Basic Term for the Delivered Aircraft shall commence on the
Delivery Date and shall end on the Expiration Date, which shall be June 2, 2013
unless the Lease is extended or terminated prior thereto in accordance with the
terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay Rent
(as defined in the Lease Agreement) in the amounts and at the times provided in
the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(e) of the Lease Agreement, and
(ii) Lessee has accepted the Delivered Aircraft for all purposes of Lease
Supplement No. 1 as further supplemented by Lease Supplement No. 2, hereof and
of the Lease Agreement, and the Delivered Aircraft is (A) as far as Lessee
reasonably ascertained from the acceptance procedures provided for in the
Purchase Agreement airworthy, in accordance with specifications, and in good
working order and repair, it being understood that Lessee by this confirmation
is not giving any warranty of any kind with respect to the Aircraft, and (B)
free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing law, are hereby incorporated by
reference in this Lease Supplement No. 3 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 3 may be executed in any number of
counterparts; each of such counterparts, except as provided in Section 21(e) of
the Lease Agreement, shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this
D-1
<PAGE> 126
Lease Supplement 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 Supplement may be created except by the transfer
or possession of the counterpart containing the printed receipt therefor
executed by Indenture Trustee on the signature page hereof.
D-1
<PAGE> 127
IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 3 to be duly executed 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:
D-1
<PAGE> 128
The undersigned acknowledges receipt of this original counterpart
of the foregoing Lease Supplement on this _______ day of ____________, 1996 and
consents to the terms hereof.
THE CHASE MANHATTAN BANK, AS
SUCCESSOR IN INTEREST TO MANUFACTURERS
HANOVER TRUST COMPANY, not in its
individual capacity, but solely as
Indenture Trustee
By:_______________________________
Title:
D-1
<PAGE> 129
SCHEDULE 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers Serial No.
N631AW 77
Installed
IAE
Engines
Model No. Serial No.
V2500 V0069
V2500 V0076
D-1
<PAGE> 130
EXHIBIT D-2
to
Second Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-2
<PAGE> 131
EXHIBIT E
to
Second Amended and Restated Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Aircraft, Lessee, at its own
cost and expense, shall return the Aircraft in compliance with the following:
(1) The Aircraft shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Aircraft as if such Aircraft were owned and were to have been kept in
continued regular service by Lessee, without discrimination as to any other
similar aircraft owned or leased by Lessee.
(2) The Aircraft shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Aircraft
as are permitted under this Lease.
(3) The Aircraft shall have installed the full complement of
Engines (as used herein the term "Engines" includes engines for which title will
be transferred to Lessor pursuant to Section 16(c)) and other equipment, parts,
components, accessories, and loose equipment subleased hereunder or substituted
therefor, each such item functioning in accordance with its intended use.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Aircraft previously deactivated by Lessee and shall assure each
such system is properly functioning for its intended use.
(5) Each Engine shall have just completed a hot and cold section
boroscope and/or radiographic isotope inspection by Lessor (at Lessee's cost and
expense) of the low and high pressure compressors and turbine area, and shall
have just completed engine condition runs, and any discrepancies detected shall
be corrected at Lessee's cost and expense in accordance with the Manufacturer's
maintenance policies and procedures.
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike
E
<PAGE> 132
manner from the Aircraft and the Aircraft shall have been repainted in a good
and workmanlike manner in the livery specified by Lessor.
(7) The Aircraft shall have simultaneously with such return
completed a "block 'C' Check" or the equivalent level designated check or checks
(inclusive of all phases of a "block 'C' Check" or equivalent level designated
check if the Maintenance Program is a "phase" program), in accordance with
Lessee's Maintenance Program such that all inspections and airworthiness
directives having terminating actions due within the next "block 'C' Check" or
equivalent level designated check(s), and all other actions as per the
Manufacturer's minimum recommendations in its then current maintenance planning
document for such check or checks, shall have been accomplished immediately
prior to redelivery.
(8) Neither the Aircraft nor any Engine shall have any scheduled
or unscheduled open or deferred maintenance items or placards.
(9) No Engine shall be on "Watch" and each Engine shall comply
with Lessee's Maintenance Program without waiver, deviations or exceptions.
(10) Each landing gear assembly shall have no less than 50% of
allowable hours or cycles, whichever is the more limiting factor, under Lessee's
Maintenance Program, remaining until the next scheduled overhaul or replacement.
(11) Each Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, and each Engine shall have not more than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, since the last engine compressor
refurbishment, and each Engine shall have not more than 2,500 hours or 2,500
cycles, whichever is the more limiting factor, since its last turbine
restoration, based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
E
<PAGE> 133
(12) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(13) The Airframe shall be returned to Lessor with not less than
fifty percent (50%) of the total scheduled period between scheduled Major
Structural Inspections of the most comprehensive type (currently referred to as
an "eight year" heavy structural inspection" or "8C" inspection under the
Manufacturer's maintenance planning document in effect on the date hereof) with
respect to allowable hours, cycles or calendar months, whichever is the more
limiting factor, remaining until the next scheduled Major Structural Inspection
of the most comprehensive type, including, without limitation, the replacement
of any safe-life limited parts, required in accordance with the Lessee's then
current Maintenance Program or the Manufacturer's mandatory life limits and,
therefore, at a minimum, having just completed a "four-year heavy structural
inspection" or "4C" inspection as referred to in the Manufacturer's maintenance
planning document in effect on the date hereof.
(14) All software associated with or relating to any on-board
avionic equipment must be delivered to Lessor and be in a condition complying
with the Manufacturer's then recommended standards.
E
<PAGE> 134
EXHIBIT F-1
to
Second Amended and Restated Aircraft Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
All Nippon Airways
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Cathay Pacific
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German
Airlines)
Finnair Oy
Iberia
Japan Air Lines, Co., Ltd (JAL)
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart
Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Toa Domestic Airlines - TDA
Union Des Transports Aeriens
Varig S.A. (Viacao Aerea Rio-Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of particular airlines from the above list of Foreign Air Carriers
(as the same may be amended pursuant to this provision) based upon Lessor's
reasonable judgment. Lessee may at any time, by written notice to Lessor,
propose the addition of particular airlines to such list of Foreign Air Carriers
based upon
F-1
<PAGE> 135
Lessee's reasonable judgment and which are comparable to the above airlines.
(b) If Lessee has not objected in writing to the deletion of a
particular airline proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular airline proposed by Lessee as provided in paragraph (a), in each case
within thirty (30) days after receipt of notice of such proposal, the list of
Foreign Air Carriers shall be deemed amended without further act to delete or
add such airline. If Lessee or Lessor delivers a timely objection in writing to
a proposal made by the other pursuant to paragraph (a), each party agrees to
consult promptly at the request of the other in a good-faith effort to resolve
the disagreement through negotiation; provided, however, that an airline which
Lessor has proposed to delete shall be deleted from such list if there will be
at least twenty (20) or such lesser number as Lessor and Lessee shall reasonably
determine, if the number of airlines of a type similar to the airlines listed
above which may be included within the definition of Foreign Air Carriers is
substantially reduced as a result of consolidation in the airline industry other
airlines remaining on such list after giving effect to such deletion and any
other deletions then proposed by Lessor.
(c) Notwithstanding any other provision hereof, no addition shall
be made, and an airline shall be deleted from such list if, such airline would
not be permitted to be a lessee under the provisions of the Lease, and no
deletion of an airline from the list of Foreign Air Carriers pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part which
was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
F-1
<PAGE> 136
EXHIBIT F-2
to
Second Amended and Restated Aircraft Lease Agreement
SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hong Kong Spain
Hungary Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
- -------------
* So long as on the date of entering into the proposed sublease such country
and the United States have diplomatic relations at least as good as those
in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of a particular country from the above list of Permitted Foreign
Sublessee Domiciles (as the same may be amended pursuant to this provision)
based
F-2
<PAGE> 137
upon Lessor's reasonable judgment. Lessee may at any time, by written notice to
Lessor, propose the addition of particular countries which are comparable to the
above countries to such list of Permitted Foreign Sublessee Domiciles based upon
Lessee's reasonable judgment.
(b) If Lessee has not objected in writing to the deletion of a
particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular country proposed by Lessee as provided in paragraph (a), in each case
within thirty (30) days after receipt of notice of such proposal, the list of
Permitted Foreign Sublessee Domiciles shall be deemed amended without further
act to delete or add such country. If Lessee or Lessor delivers a timely
objection in writing to a proposal made by the other pursuant to paragraph (a),
each party agrees to consult promptly at the request of the other in a
good-faith effort to resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, no deletion of a
country from the list of Permitted Foreign Sublessee Domiciles pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part which
was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
F-2
<PAGE> 138
EXHIBIT G
to
Amended and Restated Aircraft Lease Agreement
OPINION OF LESSEE'S SPECIAL COUNSEL
G-1
<PAGE> 1
EXHIBIT 4.22
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 __,
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 __, 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. N914GP
<PAGE> 2
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) Place of Delivery and Acceptance....................... 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.............. 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
i
<PAGE> 3
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
Section 14. Liens.................................................. 86
ii
<PAGE> 4
Page
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> 5
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
Exhibit G - Opinion of Lessee's Special Counsel
iv
<PAGE> 6
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 __, 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 "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", "Trust
Company" and "Trust Indenture Estate" shall have the meanings specified in the
Indenture and 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).
"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
<PAGE> 7
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 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
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<PAGE> 8
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 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
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<PAGE> 9
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 due on such Basic Rent Payment Date shall be made on the next succeeding
Business Day.
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<PAGE> 10
"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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<PAGE> 11
"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.
"Delivery Location" shall mean the location for the delivery of the
Aircraft specified in Exhibit C.
"$" 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.
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<PAGE> 12
"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 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> 13
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, the Trust Agreement, each Trust Supplement, the Indenture, each
Indenture Supplement,
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<PAGE> 14
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, 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.
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<PAGE> 15
"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 Original Head Lessee (only with respect
to the Tax Indemnification Agreement), the Trust Estate, Parent (only with
respect to the Tax Indemnification Agreement), 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 __, 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> 16
"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> 17
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> 18
Documents, the Purchase Documents or the Financing Documents; (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 or 19 (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
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<PAGE> 19
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 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
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 immediately prior to the
Restatement Date, as more particularly described in Annex I attached hereto.
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"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 any and all lease agreements, as amended,
supplemented or otherwise modified from time to time (other than this Lease)
between Lessor or its successors or permitted assigns and Lessee [or any of its
Affiliates] or any of their successors or permitted assigns relating to any or
all, as the context so requires, of (a) Airbus model A320 aircraft and (b) V2500
engines.
"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., 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
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"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 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
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(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.
"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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"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 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
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<PAGE> 24
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 or Section 21 of the Refunding
Agreement; (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] the Refunding Agreement 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
and/or the Refunding 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 and/or the Refunding Agreement; (ix) an
amount equal to the amount payable by the Owner Trustee pursuant to Section 2.02
of the Indenture in respect of the amount referred to as Net Interest and
Related Charges (as defined therein); 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
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<PAGE> 25
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 __, 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 the Renewal Term, if Lessee extends the Term in accordance
with Section 20, and 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.
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<PAGE> 26
"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 therein 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> 27
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) Place of Delivery and Acceptance. The Aircraft was delivered to
and accepted by Lessee at the Delivery Location.
(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
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<PAGE> 28
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 [payment] 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 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.
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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, 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,
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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, 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.
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<PAGE> 31
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 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
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<PAGE> 32
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 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
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<PAGE> 33
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 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:
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(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 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
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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 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;
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(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 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;
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(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 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
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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 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,
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(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 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
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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 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
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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 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
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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 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
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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, 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.
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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 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
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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
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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;
(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.
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(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. 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 (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
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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 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
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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 Community 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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(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 and, thereafter, the immediately
preceding opinion of counsel, if any, 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, if any,
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,
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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 the next five (5) years
(or such other 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 at
Lessor's or Indenture Trustee's request, 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 the immediately preceding opinion of
counsel, if any, 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, if any, 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 the next five (5) years (or such other period of time as reflects
the then-current applicable Law), reciting the details of such actions.
(l) Letter of Credit. Lessee shall provide to Lessor, as
named beneficiary thereof, one or more irrevocable standby letters of credit, in
form and substance
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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 $1,000,000, 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
clause (Y) below;
(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 in substantially 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 transferrable
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 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
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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, the Other Leases or any sublease,
(ii) retain any amounts drawn under the Letter of Credit or Other Letters of
Credit for its own account or apply (including, without limitation, by way of
set off against) such drawn amounts as it may elect 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; provided, however, that in the
case of the use of such drawn amounts to make any payment of Rent, Lessee's
right of offset shall be limited to amounts 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); and
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 then 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 or
retained and Lessor's application or retention of any such amounts shall not
constitute a cure of the applicable Event of Default. 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, retention or other utilization of all or
any portion of the amounts drawn under the Letter of Credit in accordance with
this Section 8(l), Lessee shall on demand reinstate the amount of the Letter of
Credit to the full [face amount] Lease Payment or provide to Lessor an
additional Letter of Credit meeting the requirements of this
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Section 8(l), so that the Letter of Credit at all times equals the original
[face amount] provided for herein.]
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 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
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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 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
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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.
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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 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
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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 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 Rent
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. If any such deduction or withholding of Taxes
is required with respect to Rent, Lessee shall pay an additional amount of Rent
such that the net amount
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actually received by each Indemnitee, after such deduction or withholding, will
be equal to all such amounts that would be received by such Indemnitee if no
such deduction or withholding had been required. If Lessee pays any withholding
Tax to any Indemnitee (or to any taxing authority for the account of any such
Indemnitee) as a result of the application of the preceding sentence with
respect to any withholding Tax which is an excluded tax in respect of such
Indemnitee pursuant to Section 10(b), then such Indemnitee (or, in the case of
Taxes imposed on the Owner Trustee, the Owner Participant to the extent the
exclusion pursuant to Section 10(b) is by reason of the place of organization or
business, or activities of, or is otherwise attributable to, the Owner
Participant or any of its related Indemnitees (other than the Owner Trustee)),
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. Except as provided in
Section 10(b), 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, 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
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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
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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 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,
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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 Indemnitee's representations, warranties, or covenants
contained in Sections 9(a) or 12 of the Refunding Agreement in any
material respect, or from a failure by such Indemnitee to fulfill
its contest obligations, and
(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.
(c) Covered Income Tax. For purposes of clauses (i) and
(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
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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 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
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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 applicable Indemnitee or will notify
the applicable Indemnitee of such requirement and make such report or return in
such manner as shall be reasonably satisfactory to such Indemnitee. 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
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).
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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 (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 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
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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 Lessee to the effect that a reasonable
basis (as defined in ABA Opinion 85-352) exists to contest such
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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 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
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"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
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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 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); (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 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; and (ix) furnish the appraisal referred to above. 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 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
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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) 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
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Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant; and (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. 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
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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 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.
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(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
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
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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 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
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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. 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
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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 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
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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 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
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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, 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
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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 Indenture Trustee a certificate executed and
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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 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 dated as of November __, 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
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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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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 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,
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,
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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 (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 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
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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 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
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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 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 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
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(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), (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
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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.
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
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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
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
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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 or
Indenture Trustee, 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 or Indenture
Trustee 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 Owner Participant or Indenture Trustee may
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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 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.
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(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 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
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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 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)
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AWA - 13 LEASE
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.
(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.
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(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 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
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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 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
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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 paid all costs and expenses for such parking, storage
and insurance.
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(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 to pay any amount owed by Lessee
under the Tax Indemnification Agreement or] 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 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 the Pass Through Trust 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
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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, the Refunding Agreement or the Pass Through Trust 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
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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
(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
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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 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
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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, 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
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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 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
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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
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.
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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
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 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
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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.
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
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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 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 Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
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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 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 Values (with appropriate adjustments, but
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
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<PAGE> 112
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 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.
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<PAGE> 113
(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.
(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
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<PAGE> 114
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 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).
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<PAGE> 115
(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 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
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<PAGE> 116
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
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
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<PAGE> 117
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 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.
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<PAGE> 118
(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 (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> 119
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> 120
ANNEX I
to
Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF 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
September 28, 1990 and assigned Conveyance No. E10188, as supplemented by the
following described instruments:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
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)
<PAGE> 121
EXHIBIT A
to
Amended and Restated Aircraft Lease Agreement
STIPULATED LOSS VALUES
The "Stipulated Loss Value" of the Aircraft leased hereunder during the Term
shall be determined as of the date provided in the Lease and shall be an amount
equal to the amount shown below as of the applicable "Stipulated Loss Value
Date" set forth below.
STIPULATED LOSS VALUES
S/N 091
Stipulated
Loss Value
Date
----------
27-Oct-90
27-Nov-90
27-Dec-90
27-Jan-91
27-Feb-91
27-Mar-91
27-Apr-91
27-May-91
27-Jun-91
27-Jul-91
27-Aug-91
27-Sep-91
27-Oct-91
27-Nov-91
27-Dec-91
27-Jan-92
27-Feb-92
27-Mar-92
27-Apr-92
27-May-92
27-Jun-92
27-Jul-92
27-Aug-92
27-Sep-92
27-Oct-92
27-Nov-92
27-Dec-92
27-Jan-93
27-Feb-93
27-Mar-93
A
<PAGE> 122
27-Apr-93
27-May-93
27-Jun-93
27-Jul-93
27-Aug-93
27-Sep-93
27-Oct-93
27-Nov-93
27-Dec-93
27-Jan-94
27-Feb-94
27-Mar-94
27-Apr-94
27-May-94
27-Jun-94
27-Jul-94
27-Aug-94
27-Sep-94
27-Oct-94
27-Nov-94
27-Dec-94
27-Jan-95
27-Feb-95
27-Mar-95
27-Apr-95
27-May-95
27-Jun-95
27-Jul-95
27-Aug-95
27-Sep-95
27-Oct-95
27-Nov-95
27-Dec-95
27-Jan-96
27 Feb 96
27-Mar-96
27-Apr-96
27-May-96
27-Jun-96
27-Jul-96
27-Aug-96
27-Sep-96
27-Oct-96
27-Nov-96
27-Dec-96
27-Jan-97
27-Feb-97
A
<PAGE> 123
27-Mar-97
27-Apr-97
27-May-97
27-Jun-97
27-Jul-97
27-Aug-97
27-Sep-97
27-Oct-97
27-Nov-97
27-Dec-97
27-Jan-98
27-Feb-98
27-Mar-98
27-Apr-98
27-May-98
27-Jun-98
27-Jul-98
27-Aug-98
27-Sep-98
27-Oct-98
27-Nov-98
27-Dec-98
27-Jan-99
27-Feb-99
27-Mar-99
27-Apr-99
27-May-99
27-Jun-99
27-Jul-99
27-Aug-99
27-Sep-99
27-Oct-99
27-Nov-99
27-Dec-99
27-Jan-00
27-Feb-00
27-Mar-00
27-Apr-00
27-May-00
27-Jun-00
27-Jul-00
27-Aug-00
27-Sep-00
27-Oct-00
27-Nov-00
27-Dec-00
27-Jan-01
A
<PAGE> 124
27-Feb-01
27-Mar-01
27-Apr-01
27-May-01
27-Jun-01
27-Jul-01
27-Aug-01
27-Sep-01
27-Oct-01
27-Nov-01
27-Dec-01
27-Jan-02
27-Feb-02
27-Mar-02
27-Apr-02
27-May-02
27-Jun-02
27-Jul-02
27-Aug-02
27-Sep-02
27-Oct-02
27-Nov-02
27-Dec-02
27-Jan-03
27-Feb-03
27-Mar-03
27-Apr-03
27-May-03
27-Jun-03
27-Jul-03
27-Aug-03
27-Sep-03
27-Oct-03
27-Nov-03
27-Dec-03
27-Jan-04
27-Feb-04
27-Mar-04
27-Apr-04
27-May-04
27-Jun-04
27-Jul-04
27-Aug-04
27-Sep-04
27-Oct-04
27-Nov-04
27-Dec-04
A
<PAGE> 125
27-Jan-05
27-Feb-05
27-Mar-05
27-Apr-05
27-May-05
27-Jun-05
27-Jul-05
27-Aug-05
27-Sep-05
27-Oct-05
27-Nov-05
27-Dec-05
27-Jan-06
27-Feb-06
27-Mar-06
27-Apr-06
27-May-06
27-Jun-06
27-Jul-06
27-Aug-06
27-Sep-06
27-Oct-06
27-Nov-06
27-Dec-06
27-Jan-07
27-Feb-07
27-Mar-07
27-Apr-07
27-May-07
27-Jun-07
27-Jul-07
27-Aug-07
27-Sep-07
27-Oct-07
27-Nov-07
27-Dec-07
27-Jan-08
27-Feb-08
27-Mar-08
27-Apr-08
27-May-08
27-Jun-08
27-Jul-08
27-Aug-08
27-Sep-08
27-Oct-08
27-Nov-08
A
<PAGE> 126
27-Dec-08
27-Jan-09
27-Feb-09
27-Mar-09
27-Apr-09
27-May-09
27-Jun-09
27-Jul-09
27-Aug-09
27-Sep-09
27-Oct-09
27-Nov-09
27-Dec-09
27-Jan-10
27-Feb-10
27-Mar-10
27-Apr-10
27-May-10
27-Jun-10
27-Jul-10
27-Aug-10
27-Sep-10
27-Oct-10
27-Nov-10
27-Dec-10
27-Jan-11
27-Feb-11
27-Mar-11
* **
* Thereafter, during any (i) Renewal Term or (ii) extension or
deemed extension of the Term of the Lease due to the occurrence of
an event described in clause (iii) to the definition of
"Supplemental Rent" in the Lease, "Stipulation Loss Value Date"
shall mean the 27th day of each calendar month.
** Thereafter, such amount as determined in accordance with
Section 20(ii) of the Lease.
A
<PAGE> 127
EXHIBIT B
to
Amended and Restated Aircraft Lease Agreement
AIRCRAFT RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee) of
each of the following:
A. CERTIFICATES
1. Certificate of Airworthiness (FAA)
2. Lessee to supply Radio License
2a. Certificate of Sanitary Construction
B. AIRCRAFT STATUS RECORDS
3. Log Book (currently on Aircraft)
4. Airframe Maintenance Status (with time-to-go or
time since last)
5. Airworthiness Directive Compliance Report
6. Modification Status report
7. Weighing Report (most recent)
8. Accident and incident report
9. List of Life Limited Components (with
time-to-go)
C. AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance
visits)
10. Test Flight Reports
11. Job Cards and Work Accomplishment Documents
(copies)
12. X-ray pictures (most recent)
B
<PAGE> 128
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
15. Mechanical Interruption Summary
E. ENGINE RECORDS (for each engine)
16. Last overhaul and repair documents
17. Airworthiness Directive Compliance Report
18. List of Life Limited Components
19. Modification Status Report
F. APU RECORDS
20. Last Overhaul and Repair Documents
21. Airworthiness Directive Compliance Report
22. List of Life Limited Components
23. Modification Status Report
G. COMPONENT RECORDS
24. Component records maintained in accordance with
a record keeping policy approved by and
acceptable to the FAA to certify the status and
maintenance histories of the components
H. MANUALS
25. Approved Flight Manual
26. Flight Crew Operating Manual
27. Weight and Balance Manual
28. Wiring Diagram Manual
29. Illustrated Parts Catalog
I. MISCELLANEOUS TECHNICAL DOCUMENTS
30. Operations Specification
31. Passenger Cabin Configuration Drawings
B
<PAGE> 129
J. Any other documents, manuals, reports or related information delivered with
or related to the Aircraft, updated as may be required to reflect the
current aircraft status.
B
<PAGE> 130
EXHIBIT C
to
Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the Lease, Basic Rent
shall be payable in semi-annual installments,
each of which shall be in an amount equal to the
amount and in arrears, as set forth in Schedule I
hereto.
Basic Rent
Payment Date: Each such date set forth as such on Schedule I
hereto.
Delivery
Location: Toulouse, France.
Manufacturer: Airbus Industrie
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in the Tax
Indemnification Agreement.
Payment Location: So long as the Lien of the Indenture shall remain
in effect, Fleet National Bank, 777 Main Street,
Hartford, CT 06115, Attn. Philip Kane, Corporate
Trust Administration, Ref. GPA-AWA, for the
account of Fleet National Bank Account No. ABA
#011900445, ACCT. #0067548290 and thereafter (and
at all times with respect to Excepted Payments)
________, for the account of ________ Account No.
________.
Renewal Rent: During the Renewal Term of the Lease Renewal Rent
shall be payable in installments, semi-annually
in arrears.
Renewal Rent
Payment Date: The same day and month during each year of the
Renewal Term on which Basic Rent was due
(the Basic Rent Payment Dates). 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
C
<PAGE> 131
Date shall be made on the next succeeding
Business Day.
Restricted Use
Period: On and after the Delivery Date until and
including the last day of the Owner
Participant's seventh full fiscal year
after the Delivery Date.
Lease
Identification: A fireproof metal plate bearing the
following legend: "Title to this Aircraft
is held by Wilmington Trust Company, not
in its individual capacity but solely as
Owner Trustee, as Lessor, which is the
registered owner thereof on the U.S. FAA
Aircraft Registry, and which has leased
this Aircraft to America West Airlines,
Inc., as Lessee" and, for so long as the
Lien of the Indenture shall not have been
discharged, bearing the following
additional legend: "Mortgaged to Fleet
National Bank as Indenture Trustee."
Lessee's
Address: America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (602) 693-5990
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Rodney Square North
Wilmington, DE 19890
Telecopier: ( )
Attention:
C
<PAGE> 132
EXHIBIT D-1
to
Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT [GPA 1990 AWA-13] NO. 3, dated November __, 1996,
between WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual
capacity but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-13]
dated September 21, 1990, as amended, supplemented, or otherwise modified from
time to time) (together with its successors and assigns, "Lessor"), and AMERICA
WEST AIRLINES, INC., a Delaware corporation (together with its successors,
"Lessee").
Lessor and Lessee have heretofore entered into that certain
Amended and Restated Aircraft Lease Agreement [GPA 1990 AWA-13] dated as of
September 21, 1990, as Amended and Restated as of November __, 1996 (as further
amended, supplemented or otherwise modified from time to time, herein called the
"Lease Agreement", and the defined terms therein being hereinafter used with the
same meaning) and that certain Lease Supplement [GPA 1990 AWA-13] No. 1 dated
September 28, 1990 ("Lease Supplement No. 1") and that certain Lease Supplement
[GPA 1990 AWA-13] No. 2 dated December 31, 1991 ("Lease Supplement No. 2"). The
Lease Agreement provides for the execution and delivery from time to time of a
Lease Supplement substantially in the form hereof for the purpose of leasing the
aircraft described below (or confirming the leasing of the aircraft described
below) under the Lease Agreement as and when delivered by Lessor to Lessee in
accordance with the terms thereof.
The Lease Agreement relates to the aircraft, parts and engines
described below, and a counterpart of the Lease Agreement is attached hereto and
made a part hereof, and this Lease Supplement, together with such attachment, is
being filed for recordation on the date hereof with the FAA as one document.
NOW, THEREFORE, in consideration of the premises and other good
and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has delivered and
leased to Lessee under the Lease Agreement on September 28,
1990, as evidenced by Lease Supplement No. 1 and as further
D-1
<PAGE> 133
supplemented by Lease Supplement No. 2, and Lessee hereby confirms that it has
accepted and leased from Lessor under the Lease Agreement on September 28, 1990,
as evidenced by Lease Supplement No. 1 and as further supplemented by Lease
Supplement No. 2, that certain Airbus Model A320-231 commercial jet aircraft
airframe and two IAE V2500 engines (each of which Engines has 750 or more rated
takeoff horsepower or the equivalent of such horsepower) described in Schedule 1
hereto (the "Delivered Aircraft").
2. The Delivery Date of the Delivered Aircraft is
September 28, 1990.
3. The Basic Term for the Delivered Aircraft shall commence on the
Delivery Date and shall end on the Expiration Date, which shall be March 27,
2011 unless the Lease Agreement is extended or deemed extended or terminated
prior thereto in accordance with the terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay Rent
(as defined in the Lease Agreement) in the amounts and at the times provided in
the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Aircraft and each Engine installed thereon or belonging thereto have been duly
marked in accordance with the terms of Section 6(e) of the Lease Agreement, and
(ii) Lessee has accepted the Delivered Aircraft for all purposes of Lease
Supplement No. 1, as further supplemented by Lease Supplement No. 2, hereof and
of the Lease Agreement, and the Delivered Aircraft is (A) as far as Lessee
reasonably ascertained from the acceptance procedures provided for in the
Purchase Agreement, airworthy, in accordance with specifications, and in good
working order and repair, it being understood that Lessee by this confirmation
is not giving any warranty of any kind with respect to the Aircraft, and (B)
free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing Law, are hereby incorporated by
reference in this Lease Supplement No. 3 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 3 may be executed in
any number of counterparts; each of such counterparts,
D-1
<PAGE> 134
except as provided in Section 21(e) of the Lease Agreement, shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same Lease Supplement. To the extent, if any, that
this Lease Supplement 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 Supplement may be created except by the transfer
or possession of the counterpart containing the printed receipt therefor
executed by Indenture Trustee on the signature page hereof.
D-1
<PAGE> 135
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement No. 3 to be duly executed by its duly authorized officer on 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:
D-1
<PAGE> 136
The undersigned acknowledges receipt of this original counterpart
of the foregoing Lease Supplement on this _______ day of November, 1996 and
consents to the terms hereof.
Fleet National Bank, not in its
individual capacity, but solely as
Indenture Trustee
By:___________________________
Title:
D-1
<PAGE> 137
SCHEDULE 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers Serial No.
N914GP 091
Installed
IAE
Engines
Model No. Serial No.
V2500 V0099
V2500 V0101
D-1
<PAGE> 138
EXHIBIT D-2
to
Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-2
<PAGE> 139
EXHIBIT E
to
Amended and Restated Aircraft Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Aircraft, Lessee, at its own
cost and expense, shall return the Aircraft in compliance with the following:
(1) The Aircraft shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Aircraft as if such Aircraft were owned and were to have been kept in
continued regular service by Lessee, without discrimination as to any other
similar aircraft owned or leased by Lessee.
(2) The Aircraft shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Aircraft
as are permitted under this Lease.
(3) The Aircraft shall have installed the full complement of
Engines (as used herein the term "Engines" includes engines for which title will
be transferred to Lessor pursuant to Section 16(c)) and other equipment, parts,
components, accessories, and loose equipment subleased hereunder or substituted
therefor, each such item functioning in accordance with its intended use.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Aircraft previously deactivated by Lessee and shall assure each
such system is properly functioning for its intended use.
(5) Each Engine shall have just completed a hot and cold section
baroscope and/or radiographic isotope inspection by Lessor (at Lessee's cost and
expense) of the low and high pressure compressors and turbine area, and shall
have just completed engine condition runs, and any discrepancies detected shall
be corrected at Lessee's cost and expense in accordance with the Manufacturer's
maintenance policies and procedures.
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike manner from the Aircraft and the
Aircraft shall have been
E
<PAGE> 140
repainted in a good and workmanlike manner in the livery specified by Lessor.
(7) The Aircraft shall have simultaneously with such return
completed a "block 'C' Check" or the equivalent level designated check or checks
(inclusive of all phases of a "block 'C' Check" or equivalent level designated
check if the Maintenance Program is a "phase" program), in accordance with
Lessee's Maintenance Program such that all inspections and airworthiness
directives having terminating actions due within the next "block 'C' Check" or
equivalent level designated check(s), and all other actions as per the
Manufacturer's minimum recommendations in its then current maintenance planning
document for such check or checks, shall have been accomplished immediately
prior to redelivery.
(8) Neither the Aircraft nor any Engine shall have any scheduled
or unscheduled open or deferred maintenance items or placards.
(9) No Engine shall be on "Watch" and each Engine shall comply
with Lessee's Maintenance Program without waiver, deviations or exceptions.
(10) Each landing gear assembly shall have no less than 50% of
allowable hours or cycles, whichever is the more limiting factor, under Lessee's
Maintenance Program, remaining until the next scheduled overhaul or replacement.
(11) Each Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, and each Engine shall have not more than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, since the last engine compressor
refurbishment, and each Engine shall have not more than 2,500 hours or 2,500
cycles, whichever is the more limiting factor, since its last turbine
restoration, based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
E
<PAGE> 141
(12) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(13) The Airframe shall be returned to Lessor with not less than
fifty percent (50%) of the total scheduled period between scheduled Major
Structural Inspections of the most comprehensive type (currently referred to as
an "eight year" heavy structural inspection" or "8C" inspection under the
Manufacturer's maintenance planning document in effect on the Delivery Date)
with respect to allowable hours, cycles or calendar months, whichever is the
more limiting factor, remaining until the next scheduled Major Structural
Inspection of the most comprehensive type, including, without limitation, the
replacement of any safe-life limited parts, required in accordance with the
Lessee's then current Maintenance Program or the Manufacturer's mandatory life
limits and, therefore, at a minimum, having just completed a "four-year heavy
structural inspection" or "4C" inspection as referred to in the Manufacturer's
maintenance planning document in effect on the Delivery Date.
(14) All software associated with or relating to any on-board
avionic equipment must be delivered to Lessor and be in a condition complying
with the Manufacturer's then recommended standards.
(15) 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, or, in the case of insufficient quantities, an
appropriate payment will be made by Lessee at the then current market price of
oil or fuel, as the case may be.
E
<PAGE> 142
EXHIBIT F-1
to
Amended and Restated Aircraft Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
All Nippon Airways
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Cathay Pacific
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German
Airlines)
Finnair Oy
Iberia
Japan Air Lines, Co., Ltd (JAL)
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart
Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Toa Domestic Airlines - TDA
Union Des Transports Aeriens
Varig S.A. (Viacao Aerea Rio-Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose the
deletion of particular airlines from the above list of Foreign Air Carriers (as
the same may be amended pursuant to this provision) based upon Lessor's
reasonable judgment. Lessee may at any time, by written notice to Lessor,
propose the addition of particular airlines to such list of Foreign Air Carriers
based upon Lessee's reasonable judgment and which are comparable to the above
airlines.
F-1
<PAGE> 143
(b) If Lessee has not objected in writing to the deletion of a particular
airline proposed by Lessor as provided in paragraph (a) of this Exhibit, or if
Lessor has not objected in writing to the addition of a particular airline
proposed by Lessee as provided in paragraph (a), in each case within 30 days
after receipt of notice of such proposal, the list of Foreign Air Carriers shall
be deemed amended without further act to delete or add such airline. If Lessee
or Lessor delivers a timely objection in writing to a proposal made by the other
pursuant to paragraph (a), each party agrees to consult promptly at the request
of the other in a good-faith effort to resolve the disagreement through
negotiation; provided, however, that an airline which Lessor has proposed to
delete shall be deleted from such list if there will be at least twenty (20) (or
such lesser number as Lessor and Lessee shall reasonably determine, if the
number of airlines of a type similar to the airlines listed above which may be
included within the definition of Foreign Air Carriers is substantially reduced
as a result of consolidation in the airline industry) other airlines remaining
on such list after giving effect to such deletion and any other deletions then
proposed by Lessor.
(c) Notwithstanding any other provision hereof, no addition shall be made,
and an airline shall be deleted from such list if, such airline would not be
permitted to be a lessee under the provisions of the Lease, and no deletion of
an airline from the list of Foreign Air Carriers pursuant to this Exhibit shall
affect any existing sublease or other agreement providing for transfer of
possession of the Aircraft, the Airframe or any Engine or Part which was
permitted under the Lease at the time entered into, or preclude any subsequent
renewal or extension of such sublease or other agreement.
F-1
<PAGE> 144
EXHIBIT F-2
to
Amended and Restated Aircraft Lease Agreement
PERMITTED FOREIGN SUBLESSEE DOMICILES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)*
France Singapore
Germany South Africa
Greece South Korea
Hong Kong Spain
Hungary Sweden
Iceland Switzerland
India Thailand
Indonesia Tobago
Ireland Trinidad
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
* So long as on the date of entering into the proposed sublease such country
and the United States of America have diplomatic relations at least as good
as those in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee, propose
the deletion of a particular country from the above list of Permitted Foreign
Sublessee Domiciles (as the same may be amended pursuant to this provision)
based upon Lessor's reasonable judgment. Lessee may at any time, by written
notice to Lessor, propose the addition of particular countries which are
comparable to the above countries to such list of Permitted Foreign Sublessee
Domiciles based upon Lessee's reasonable judgment.
F-2
<PAGE> 145
(b) If Lessee has not objected in writing to the deletion of a
particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular country proposed by Lessee as provided in paragraph (a), in each case
within 30 days after receipt of notice of such proposal, the list of Permitted
Foreign Sublessee Domiciles shall be deemed amended without further act to
delete or add such country. If Lessee or Lessor delivers a timely objection in
writing to a proposal made by the other pursuant to paragraph (a), each party
agrees to consult promptly at the request of the other in a good-faith effort to
resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, no deletion of a
country from the list of Permitted Foreign Sublessee Domiciles pursuant to this
Exhibit shall affect any existing sublease or other agreement providing for
transfer of possession of the Aircraft, the Airframe or any Engine or Part which
was permitted under the Lease at the time entered into, or preclude any
subsequent renewal or extension of such sublease or other agreement.
F-2
<PAGE> 146
EXHIBIT F-3
to
Amended and Restated Aircraft Lease Agreement
PERMITTED SUBLESSEE ASSIGNMENT CONSENT
F-3
<PAGE> 147
EXHIBIT G
to
Amended and Restated Aircraft Lease Agreement
OPINION OF LESSEE'S SPECIAL COUNSEL
G
<PAGE> 1
EXHIBIT 4.23
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT [GPA
1990 AWA-E1] AND IN THE ENGINE COVERED HEREBY WILL BE OR HAS 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-E1] DATED AS OF NOVEMBER , 1996. AS PROVIDED
IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY, THAT THIS AMENDED AND RESTATED
ENGINE 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 ENGINE 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 ENGINE LEASE AGREEMENT
[GPA 1990 AWA-E1]
Dated as of December 12, 1990
Amended and Restated as of November __, 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-E1]
dated as of December 12, 1990, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One IAE International Aero Engine AG V2500-A1 Engine
Manufacturer's Serial No. V0025
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. Definitions................................................................................ 1
Section 2. Agreement to Lease......................................................................... 19
Section 3. Delivery and Acceptance; Term.............................................................. 19
(a) Time of Delivery......................................................................... 19
(b) Place of Delivery and Acceptance......................................................... 19
(c) Acceptance of Engine..................................................................... 19
(d) Term of Lease............................................................................ 19
Section 4. Rent....................................................................................... 20
(a) Rent................................................................................. 20
(i) Basic Rent.................................................................. 20
(ii) Supplemental 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................................................................ 24
Section 6. Possession and Use......................................................................... 25
(a) Possession........................................................................... 25
(i) Lease, Assignment and Transfer.............................................. 25
(ii) Certain Limitations on Transfers............................................ 28
(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........................................................... 38
(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>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
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........................................................................... 50
(c) Covered Income Tax................................................................... 52
(d) Reports and Returns.................................................................. 54
(e) After-Tax Basis...................................................................... 54
(f) Tax Benefit.......................................................................... 54
(g) Payment.............................................................................. 55
(h) Contest.............................................................................. 56
(i) Refund............................................................................... 57
(j) Diligence............................................................................ 58
(k) Affiliated Group..................................................................... 58
(l) Verification......................................................................... 58
(m) Survival............................................................................. 59
Section 11. Loss, Damage and Requisition.............................................................. 59
(a) Event of Loss with Respect to the Engine............................................. 59
(b) Conveyance of Replacement Engine..................................................... 61
(c) Application of Proceeds and Payments................................................. 63
(d) Requisition for Use by Government with
Respect to the Engine................................................................ 63
(e) Application in Default............................................................... 64
Section 12. Insurance................................................................................. 64
(a) Public Liability and Property Damage Insurance....................................... 64
(b) Insurance Against Loss or Damage..................................................... 66
(c) Application of Insurance Proceeds for
an Event of Loss..................................................................... 69
(d) Application of Insurance Proceeds for
Other than an Event of Loss.......................................................... 69
(e) Application in Default............................................................... 70
(f) Certificates......................................................................... 70
(g) Reinsurance.......................................................................... 71
(h) Storage.............................................................................. 72
(i) Amounts Held......................................................................... 72
(j) After the Term....................................................................... 72
(k) Governmental Indemnity............................................................... 72
Section 13. General Indemnity......................................................................... 72
Section 14. Liens..................................................................................... 78
Section 15. Protection of Title and Further Assurances................................................ 79
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 16. Return of Engine and Records.............................................................. 80
(a) Return............................................................................... 80
(b) Status Upon Return................................................................... 81
(c) Substitute Engine.................................................................... 81
(d) Records and Documents................................................................ 82
(e) Condition of Engine.................................................................. 83
(f) Final Inspection..................................................................... 83
(g) Engine Records and Documents......................................................... 84
(h) Corrections and Subsequent Corrections............................................... 85
(i) [Intentionally Left Blank]........................................................... 85
(j) Exportation of the Engine............................................................ 85
(k) Service Bulletin and Modification Kits............................................... 85
(l) Storage Upon Return.................................................................. 85
(m) Resale/Release Cooperation........................................................... 86
Section 17. Events of Default......................................................................... 86
Section 18. Remedies.................................................................................. 88
Section 19. Security for Obligations.................................................................. 94
Section 20. Renewal Option[, Purchase Option]......................................................... 95
[(a)] Renewal Option......................................................................... 95
(i) Exercise of Renewal Option.................................................. 95
(ii) Provisions Applicable During Renewal Term................................... 96
Section 21. Miscellaneous............................................................................. 96
(a) Severability, Amendment, and Construction............................................ 96
(b) GOVERNING LAW........................................................................ 97
(c) Notices.............................................................................. 97
(d) Lessor's Right to Perform for Lessee................................................. 97
(e) Counterparts......................................................................... 98
(f) Quiet Enjoyment...................................................................... 98
(g) Brokers.............................................................................. 98
(h) Investment of Funds.................................................................. 98
(i) Entire Agreement; Amendment.......................................................... 99
(j) Expenses............................................................................. 99
(k) Federal Bankruptcy Code.............................................................. 99
(l) [Reserved]...........................................................................100
(m) Submission to Jurisdiction; Service of
Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial.................................................................100
(n) Limitation on Recourse...............................................................101
(o) Successor Trustee....................................................................102
(p) Article 2-A of the UCC...............................................................102
</TABLE>
-iii-
<PAGE> 5
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 - Opinion of Lessee's Special Counsel
Exhibit H - [Intentionally Left Blank]
Exhibit I - [Intentionally Left Blank]
Exhibit J - [Intentionally Left Blank]
Exhibit K - Form of Engine Status Report
-iv-
<PAGE> 6
AMENDED AND RESTATED ENGINE LEASE AGREEMENT
THIS AMENDED AND RESTATED ENGINE LEASE AGREEMENT dated as of
December 12, 1990 and amended and restated as of November __, 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-E1] dated as of December 12, 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 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 "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", "Registration Rights
Agreement", "Restatement Date", "Trust Company", "Trust Estate", and "Trust
Indenture Estate" shall have the meanings specified in the Indenture and 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).
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or
<PAGE> 7
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, 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 the Engine or such Part for which such appraisal is to be conducted. If
Lessor
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<PAGE> 8
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 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.
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<PAGE> 9
"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 and certificated 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.
"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 __, 1990, being the date
the Engine was delivered to and accepted by
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the Original Head Lessee as Lessee hereunder for all purposes of this Lease.
"Delivery Location" shall mean the location for the delivery
of the Engine specified in Exhibit C.
"$" 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; (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
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<PAGE> 11
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 sixty (60) days 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 sixty (60) days after 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.
"FAA" shall mean the Federal Aviation Administration of the
United States Department of Transportation or any successor agency.
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<PAGE> 12
"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 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 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 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.
"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
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<PAGE> 13
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 Original Head Lessee (only with
respect to the Tax Indemnification Agreement), the Trust Estate, Parent (only
with respect to the Tax Indemnification Agreement), 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, shareholders and [partners].
"Indenture" shall mean the Amended and Restated Trust
Indenture and Security Agreement [GPA 1990 AWA-E1] dated as of December 12,
1990, and amended and restated as of November __, 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> 14
"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 1990
AWA-E1] 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-E1] No. 2, substantially in the
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<PAGE> 15
form of Exhibit D 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> 16
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; (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 or 19 (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 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 registry and complies with the requirements
applicable to maintenance of the Engine contained in the definition of
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<PAGE> 17
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, 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 Engine Lease Agreement
[GPA 1990 AWA-E1], with respect to the Aircraft, dated as of December 12, 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-E1], dated as of
December 12, 1990,
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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 any and all lease agreements, as
amended, supplemented or otherwise modified from time to time (other than this
Lease) between Lessor or its successors or permitted assigns and Lessee [or any
of its Affiliates] or any of their successors or permitted assigns relating to
any or all, as the context so requires, of (a) Airbus model A320 aircraft and
(b) V2500 engines.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(1) 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.
"Participation Agreement" shall mean the Participation
Agreement [GPA 1990 AWA-E1], dated as of December 12, 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 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
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<PAGE> 19
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, 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.
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<PAGE> 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.
"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.;
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(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 Date" shall mean each monthly date listed, or
with respect to any Renewal Term determined as set forth, on Exhibit A hereto.
"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[(a)] (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 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 with respect to any Renewal Terms 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
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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 or Section 21 of the Refunding
Agreement; (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 and 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] the Refunding Agreement 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
and/or the Refunding 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 and/or the Refunding Agreement; (ix) an
amount equal to the amount payable by the Owner Trustee pursuant to Section 2.02
of the Indenture in respect of the amount referred to as Net Interest and
Related Charges (as defined therein); 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, 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 1990 AWA-E1], dated as of
December 12, 1990, and as amended and restated as of November __, 1996, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
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"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, or 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 1990
AWA-E1] dated as of December 12, 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 the Trust Supplements.
"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-E1] No. 1 dated the Delivery Date between Lessor and Owner
Participant for the purposes 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-E1] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references therein to this Agreement.
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"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 December __, 1990.
(b) Place of Delivery and Acceptance. The Engine was delivered
to and accepted by Lessee at the Delivery Location.
(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 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.
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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 and in advance 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 plus any Make-Whole Amount due
and payable to the Note Holders pursuant to the Indenture, 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 and no amounts in respect
of any Make-Whole Amount shall be payable by reason of (A) any attachment or
diversion of Rent on account of any Lessor's Lien or Head Lessor's Lien or
Lenders' Lien, (B) any modification of the [payment] 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
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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 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 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
Engine, 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 Engine (subject to the provisions of Section
11(a)(ii) hereof), any interruption or cessation in the use
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<PAGE> 27
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 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,
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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 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
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<PAGE> 29
(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 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.
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
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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 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 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
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<PAGE> 31
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;
(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
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<PAGE> 32
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
Untied 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
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
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<PAGE> 33
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(a); or
(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, if
practicable, but in any event promptly after entering into such Wet
Lease).
(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
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
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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 or discharge nor diminish any of Lessee's
obligations hereunder or under the other Operative Documents;
(3) During the Restricted Use Period,
no Wet Lease, Permitted Sublease 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); and
(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, 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
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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. Section1110 as Lessor is entitled hereunder
and such Permitted Sublease shall contain provisions regarding such
Section1110 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, 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 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
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<PAGE> 36
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
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
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<PAGE> 37
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 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 or 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
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<PAGE> 38
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 material 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 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
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<PAGE> 39
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, [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 under the Maintenance Program and
Lessee's record keeping policies.
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(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 registered during the Restricted Use Period
and, subject to Section 11 of the Refunding Agreement, thereafter 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 not
[register] the Engine or permit the Engine 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 first priority mortgage on the Engine 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 Engine to
another country. 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 has fastened or
caused 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 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 on reasonable prior notice at reasonable times
to visit, inspect and survey the Engine, its condition, use, and
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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 Annual Report on Form
10-K as filed with the Securities and Exchange Commission or, if Lessee no
longer files such
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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 such financial statements, and that such review has
not disclosed the existence during such accounting period, nor
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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.
(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.
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.
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(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
Community 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
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<PAGE> 46
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 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 and/or the Airframe on which it is installed] 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 and, thereafter, the immediately
preceding opinion of counsel, if any, rendered
pursuant to this
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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, if any, 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 Engine and the Operative Documents for the
next five (5) years (or such other 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)(l), annually at
Lessor's or Indenture Trustee's request, 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 and/or the Airframe on
which it is installed] 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 the
immediately preceding opinion of counsel, if any, 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, if any, 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
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Trustee's security interest in the Engine and the Operative Documents for the
next five (5) years (or such other period of time as reflects the then-current
applicable Law), reciting the details of such actions.
(l) Letter of Credit. 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 $1,000,000,
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
clause (Y) below;
(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 in substantially 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 transferrable 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 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, the Other Leases or any sublease,
(ii) retain any amounts drawn under the Letter of Credit or Other Letters of
Credit for its own account or apply (including, without limitation, by way of
set off against) such drawn amounts, as it may elect 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; provided, however, that in the
case of the use of such drawn amounts to make any payment of Rent, Lessee's
right of offset shall be limited to amounts 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); and
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 then 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 or
retained and Lessor's application or retention of any such amounts shall not
constitute a cure of the applicable Event of Default. 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, retention or other utilization of all or any
portion of the amounts drawn under the Letter of
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Credit in accordance with this Section 8(l), Lessee shall on demand reinstate
the amount of the Letter of Credit to the full [face amount] Lease Payment or
provide to Lessor an additional Letter of Credit meeting the requirements of
this Section 8(l), so that the Letter of Credit at all times equals the original
[face amount] provided for herein.
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 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 (or, if a Permitted Sublease is in
effect, a Permitted Sublessee), free and clear of all rights of Lessor,
Indenture Trustee, Owner Participant and Note
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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. 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
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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 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)
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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 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
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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 Rent 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. If any such deduction or withholding of Taxes is
required with respect to Rent, Lessee shall pay an additional amount of Rent
such that the net amount actually received by each Indemnitee, after such
deduction or withholding, will be equal to all such amounts that would be
received by such Indemnitee if no such deduction or withholding had been
required. If Lessee pays any withholding Tax to any Indemnitee (or to any taxing
authority for the account of any such Indemnitee) as a result of the application
of the preceding sentence with respect to any withholding Tax which is an
excluded tax in respect of such Indemnitee pursuant to Section 10(b), then such
Indemnitee (or, in the case of Taxes imposed on the Owner Trustee, the Owner
Participant to the extent the exclusion pursuant to Section 10(b) is by reason
of the place of organization or business, or activities of, or is otherwise
attributable to, the Owner Participant or any of its related Indemnitees (other
than the Owner Trustee)), 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. Except as provided in Section 10(b), 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 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
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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 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 Engine or any Part thereof
or interest therein; (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 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:
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(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 Trustee and Owner Participant are
related Indemnitees with respect to each other) of the 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 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
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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
Indemnitee's representations, warranties, or covenants contained in Sections
9(a), 12 or 14(a) of the Refunding Agreement in any material respect, or from a
failure by such Indemnitee to fulfill its contest obligations, and
(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.
(c) Covered Income Tax. For purposes of clauses (i) and (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 Engine in such jurisdiction or
(y) the transactions
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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 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.
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(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 Engine in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to the applicable Indemnitee or will notify
the applicable Indemnitee of such requirement and make such report or return in
such manner as shall be reasonably satisfactory to such Indemnitee. 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
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
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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 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
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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
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
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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 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
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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.
(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.
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(m) Survival. All of the obligations and rights of Lessee
and Lessor under this Section 10 with respect to the Engine or any Part thereof
shall survive the assignment, or expiration or other termination, of the Lease
with respect to the Engine 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 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
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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 and Head
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.
(ii) On a Stipulated Loss Value Date 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
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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 and Head 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 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
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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) 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 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; and (ix) furnish the appraisal referred to above. 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. No Event of Loss
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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 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.
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(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 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
amounts not less than three hundred fifty million dollars ($350,000,000),
combined single limit, per occurrence or such higher amount, and of such types
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
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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 as is the
insurance 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 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 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
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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 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 if
the Engine or the Aircraft is 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 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;
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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 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
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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 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
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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 Engine which is being replaced pursuant to
Section 11(a)(i) and 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
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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 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
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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 Engine Lease Agreement [GPA 1990 AWA-E1] dated as of
November __, 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
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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 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
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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 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 Engine or any Part thereof or, 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
thereunder or to file the documentation necessary to continue FAA registration
of the Engine), 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 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
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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 for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to 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) 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 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
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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 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 [solely] to its interest in
the Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) or the breach of any of its express representations, warranties
or covenants hereunder, under any other Operative
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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 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) any 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), (vii) or 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
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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 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).
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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) 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
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 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
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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 or Indenture Trustee, 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 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
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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 or Indenture Trustee 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 Owner Participant or
Indenture Trustee 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 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
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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 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'
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
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terms hereof immediately prior to such termination and shall confirm 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 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
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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.
(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
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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 (including, without
limitation, the obligation to pay Rent 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 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
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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 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
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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 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 to pay any amount owed by
Lessee under the Tax Indemnification Agreement or] 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 the Pass Through
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Trust 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, the Refunding Agreement and the Pass Through Trust 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
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(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
(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
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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.
(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
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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 for the Engine due to and including the 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 paragraphs (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,
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payable in advance 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 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
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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.
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
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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 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
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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 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
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amounts payable hereunder (other than Excepted Payments) to 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 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[, Purchase Option].
[(a)] 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
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Rent for the Renewal Term shall be the greater of (i) 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 Values (with appropriate adjustments, but 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.
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,
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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 (until
such time as the Lien of the Indenture is discharged) and to Owner Participant,
at such address as Owner Participant 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
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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
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
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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 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
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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) [Reserved].
(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 submit 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 (as applicable), each Note Holder and their successors and assigns (as
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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 NOTHING HEREIN
SHALL BE CONSTRUED AS CONVEYING TO LESSEE ANY RIGHT, TITLE, OR INTEREST IN
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
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<PAGE> 107
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 (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> 109
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> 110
ANNEX I
to
Amended and Restated Engine Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
<PAGE> 111
AWA - E1 LEASE
EXHIBIT A
to
Amended and Restated Engine Lease Agreement
STIPULATED LOSS VALUES
The Stipulated Loss Value of the Engine leased hereunder during the Term shall
be determined as of the date provided in the Lease and shall be an amount equal
to the amount shown below as of the applicable date set forth below.
$[---------------]
1/ 2/
- -- --
- ------------------
1 Thereafter, during any (i) Renewal Term or (ii) extension or deemed extension
of the Term of the Lease due to the occurrence of an event described in clause
(iii) to the definition of "Supplemental Rent" in the Lease, "Stipulation Loss
Value Date" shall mean the __the day of each calendar month.
2 Thereafter, such amount as determined in accordance with Section 20(ii) of
the Lease.
A
<PAGE> 112
EXHIBIT B
to
Amended and Restated Engine Lease Agreement
ENGINE RECORDS AND DOCUMENTS
One original (or, if greater, the number delivered to Lessee) of each of the
following:
A. ENGINE RECORDS
1. Last overhaul and repair documents
2. Airworthiness Directive Compliance Report
3. List of Life Limited parts as outlined in Chapter
5 of the Manufacturers Maintenance Manual, supported by full
traceability of each part to the OEM or its approved licensee
or a FAR 121 operator
4. Modification Status Report
B. COMPONENT RECORDS
1. Component and accessory records maintained in
accordance with a record keeping policy approved
by and acceptable to the FAA to certify the status
and maintenance histories of the components
C. Any other documents, manuals, reports or related
information delivered with or related to the Engine,
updated as may be required to reflect the current
engine status.
B
<PAGE> 113
EXHIBIT C
to
Amended and Restated Engine Lease Agreement
DEFINITIONS AND VALUES
Basic Rent: During the Basic Term of the Lease,
Basic Rent shall be payable in semi-
annual installments, each of which
shall be in an amount equal to the
amount and in advance and in arrears,
as set forth in Schedule I hereto.
Basic Rent
Payment Date: Each such date set forth as such on
Schedule I hereto.
Delivery
Location: Phoenix, Arizona.
Manufacturer: IAE
Maximum Foreign
Use Percentage: The Permitted Percentages as defined in
the Tax Indemnification Agreement.
Payment Location: So long as the Lien of the Indenture
shall remain in effect, Fleet National
Bank, 777 Main Street,Hartford, CT
06115, Attn. Philip Kane, Corporate
Trust Administration, Ref. GPA-AWA, for
the account of Fleet National Bank
Account No. _____ and thereafter (and
at all times with respect to Excepted
Payments), _____, for the account of
_____ Account No. _____.
Renewal Rent: During the Renewal Term of the Lease,
Renewal Rent shall be payable in
installments, semi-annually [in
arrears].
Renewal Rent
Payment Date: The same day and month during each year
of the Renewal Term on which Basic Rent
was due (the Basic Rent Payment Date).
If a Renewal Rent Payment Date shall
fall on a day which is not a Business
Day, any payment due on such Renewal
C
<PAGE> 114
Rent Payment Date shall be made on the next
succeeding Business Day.
Restricted Use
Period: On and after the Delivery Date until
and including the last day of the Owner
Participant's seventh full fiscal year
after the Delivery Date.
Lease
Identification: A fireproof metal plate bearing the
following legend: "Title to this
Engine is held by Wilmington Trust
Company, not in its individual capacity
but solely as Owner Trustee, as Lessor,
and which has leased this Engine to
America West Airlines, Inc., as Lessee"
and, for so long as the Lien of the
Indenture shall not have been
discharged, bearing the following
additional legend: "Mortgaged to
Fleet National Bank, as Indenture
Trustee."
Lessee's
Address: America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Telex: 755089 (Answerback: AMERWEST)
Telecopier: (602) 693-5990
Attention: Senior Vice President -
Legal Affairs
Lessor's
Address: Wilmington Trust Company
Rodney Square North
Wilmington, DE 19890
Telecopier:
Attention:
C
<PAGE> 115
EXHIBIT D-1
to
Amended and Restated Engine Lease Agreement
LEASE SUPPLEMENT NO. 2
LEASE SUPPLEMENT NO. 2, dated November ___, 1996 between
WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual capacity
but solely as Owner Trustee under a Trust Agreement [GPA 1990 AWA-E1] dated
___________, 1996, as amended, supplemented, or otherwise modified from time to
time) (together with its successors and assigns, "Lessor"), and AMERICA WEST
AIRLINES, INC., a Delaware corporation (together with its successors, "Lessee").
Lessor and Lessee have heretofore entered into that certain
Amended and Restated Engine Lease Agreement [GPA 1990 AWA-E1] dated as of
December 12, 1990, as Amended and Restated as of November __, 1996 (as further
amended, supplemented or otherwise modified from time to time, herein called the
"Lease Agreement" and the defined terms therein being hereinafter used with the
same meaning) and that certain Lease Supplement No. 1 dated December __, 1990
("Lease Supplement No. 1"). The Lease Agreement provides for the execution and
delivery from time to time of a Lease Supplement substantially in the form
hereof for the purpose of leasing the engine described below (or confirming the
leasing of the engine described below) under the Lease Agreement as and when
delivered by Lessor to Lessee in accordance with the terms thereof.
The Lease Agreement relates to the engine and parts described
below, and a counterpart of the Lease Agreement is attached hereto and made a
part hereof, and this Lease Supplement, together with such attachment, is being
filed for recordation on the date hereof with the FAA as one document.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby confirms that it has delivered and leased to
Lessee under the Lease Agreement on December __, 1990, as evidenced by Lease
Supplement No. 1, and Lessee hereby confirms that it has accepted and leased
from Lessor under the Lease Agreement on December __, 1990, as evidenced by
Lease Supplement No. 1, that certain IAE V2500-A1 engine (which engine has 750
or more rated takeoff horsepower or the equivalent of such horsepower) and
shipping stand (which
D-1
<PAGE> 116
shipping stand is comprised of a cradle designed to hold the engine which has a
suitable shock mounting system to allow the engine to be transported by truck or
other vehicle without damage) described in Schedule 1 hereto (collectively, the
"Delivered Engine").
2. The Delivery Date of the Delivered Engine is December __,
1990.
3. The Basic Term for the Delivered Engine shall commence on
the Delivery Date and shall end on the Expiration Date, which shall be December
31, 2008, unless the Lease is terminated prior thereto in accordance with the
terms thereof.
4. Lessee hereby agrees to and confirms its obligation to pay
Rent (as defined in the Lease Agreement) in the amounts and at the times
provided in the Lease Agreement.
5. Lessee hereby confirms to Lessor that (i) the Delivered
Engine has been duly marked in accordance with the terms of Section 6(e) of the
Lease Agreement, and (ii) Lessee has accepted the Delivered Engine for all
purposes of Lease Supplement No. 1 and of the Lease Agreement, and the Delivered
Engine is (A) as far as Lessee reasonably ascertained, in accordance with
specifications, and in good working order and repair it being understood that
Lessee by this confirmation is not giving any warranty of any kind with respect
to the Engine, and (B) free and clear of all Liens except Permitted Liens.
6. All of the terms and provisions of the Lease Agreement,
including, without limitation, as to governing Law, are hereby incorporated by
reference in this Lease Supplement No. 2 to the same extent as if fully set
forth herein.
7. This Lease Supplement No. 2 may be executed in any number
of counterparts, each of such counterparts, except as provided in Section 21(e)
of the Lease Agreement, shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same Lease
Supplement. To the extent, if any, that this Lease Supplement 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
Supplement may be created except by the transfer or possession of the
counterpart containing the printed receipt therefor executed by Indenture
Trustee on the signature page hereof.
D-1
<PAGE> 117
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement No. 2 to be duly executed by its duly authorized officer on 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:
D-1
<PAGE> 118
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this ___ day of November, 1996
and consents to the terms hereof.
FLEET NATIONAL BANK, not in
its individual capacity, but
solely as Indenture Trustee
By:
-------------------------------
Title:
D-1
<PAGE> 119
SCHEDULE 1
to
LEASE SUPPLEMENT NO. 2
IAE Engine
Model No. Serial No.
V2500-A1 V0025
Shipping Stand
Part No. Serial No.
111400 22359-6
D-1
<PAGE> 120
EXHIBIT D-2
to
Amended and Restated Engine Lease Agreement
LETTER OF CREDIT
D-2
<PAGE> 121
EXHIBIT E
to
Amended and Restated Engine Lease Agreement
RETURN CONDITION REQUIREMENTS
In addition to the requirements set forth in Section 16 of the
Lease, on any Return Occasion with respect to the Engine, Lessee, at its own
cost and expense, shall return the Engine in compliance with the following:
(1) The Engine shall have at all times theretofore been
maintained and modified in accordance with Sections 6(d) and 9 hereof with the
same care, maintenance status and consideration for the technical condition of
the Engine as if such Engine were owned and were to have been kept in continued
regular service by Lessee, without discrimination as to any other similar engine
owned or leased by Lessee.
(2) The Engine shall be clean by good commercial airline
standards as on the Delivery Date with only such modifications to the Engine as
are permitted under this Lease.
(3) The Engine shall have installed the full complement of
equipment, parts, components, accessories, and loose equipment subleased
hereunder or substituted therefor, each such item functioning in accordance with
its intended use and the Engine shall be placed on the Shipping Stand.
(4) Lessee, at Lessor's request, shall activate any systems
installed on the Engine previously deactivated by Lessee and shall assure each
such system is properly functioning for its intended use, unless such
deactivation was accomplished pursuant to a manufacturer's service bulletin.
(5) The Engine shall have just completed a full hot and cold
section baroscope and/or radiographic isotope inspection by Lessor (at Lessee's
cost and expense) of the low and high pressure compressors and turbine area, and
shall have just completed engine condition runs, and any discrepancies detected
shall be corrected at Lessee's cost and expense in accordance with the
Manufacturer's maintenance policies and procedures.
E
<PAGE> 122
(6) Lessee's name, logo, and all other exterior markings shall
have been removed in a good and workmanlike manner from the Engine.
(7) The Engine shall have simultaneously with such return
completed a ground inspection, an operation ground check, engine performance
check and all other designated check or checks, in accordance with Lessee's
Maintenance Program such that all inspections and airworthiness directives
published prior to the most recent shop visit for the Engine having terminating
actions due within the next calendar year and all other actions as per the
Manufacturers' minimum recommendations in its then current maintenance planning
document due within the next calendar year shall have been accomplished
immediately prior to redelivery.
(8) The Engine shall not have any scheduled or unscheduled
open or deferred maintenance items or placards.
(9) The Engine shall not be on "Watch" and the Engine shall
comply with Lessee's Maintenance Program without waiver, deviations or
exceptions.
(10) The Engine shall have not less than 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining on any hour or cyclic
limited part, [including but not limited to critical turbine parts such as
combustors and high pressure turbine airfoils, if then limited by Lessee's
Maintenance Program,] and the Engine shall have not more than 5,000 hours or
5,000 cycles, whichever is the more limiting factor, since the last engine
compressor refurbishment, and the Engine shall have not more than 2,500 hours or
2,500 cycles, whichever is the more limiting factor, since its last turbine
restoration based on Lessee's historical experience of engine on-wing service
life or based on Lessee's hard time engine overhaul limit if in effect. The
Engine hour and cycle limits described herein shall be in accordance with
Lessee's Maintenance Program and the manufacturer's mandatory hour and cyclic
life limits and presumes an hour-to-cycle ratio of two (2.0) hours to one (1)
cycle. If the actual hour-to-cycle ratio is less than 2.0:1, then the cyclic
limit amounts described herein shall be increased proportionately.
(11) Each cycle, time or calendar controlled component in
accordance with Lessee's Maintenance Program or the Manufacturer's mandatory
life limits shall have no less than twelve months or 5,000 hours or 5,000
cycles, whichever is the more limiting factor, remaining until the next
E
<PAGE> 123
scheduled overhaul or replacement or 100% of the allowable time if less than
twelve months.
(12) The Engine shall have been stored and transported in
accordance with the Manufacturer's recommendations.
(13) For purposes of the Lease, including but not limited to
this Exhibit E, "serviceability", at the time of any Return Occasion, shall mean
that the Engine is in a condition which at a minimum satisfies the requirements
set forth in item 10 above.
E
<PAGE> 124
EXHIBIT F-1
to
Amended and Restated Engine Lease Agreement
FOREIGN AIR CARRIERS
Aer Lingus
Air Canada
Air France (Compagnie Nationale Air France)
Air New Zealand, Ltd.
All Nippon Airways
Alitalia - Italy's World Airlines
Ansett Airlines of Australia
Australian Airlines
Austrian Airlines (Oesterreichische Luftverkehrs AG)
British Airways
Canadian Airlines International Ltd.
Cathay Pacific
Deutsche Lufthansa Aktiengesellschaft (Lufthansa German
Airlines)
Finnair Oy
Iberia
Japan Air Lines, Co., Ltd (JAL)
KLM - Royal Dutch Airlines (Koninklijke Luchtvaart
Maatschappij)
Korean Air
Malaysian Airlines
QANTAS
Sabena Belgian World Airlines (Societe Anonyme Belge
D'Exploitation De La Navigation Aerienne)
Scandinavian Airlines Systems (SAS)
Singapore Airlines
Swissair (Swiss Air Transport Company Ltd.)
TAP Air Portugal (Transportes Aeros Portugeses)
Thai Airways International Ltd.
Toa Domestic Airlines - TDA
Union Des Transports Aeriens
Varig S.A. (Viacao Aerea Rio-Grandense S.A.)
(a) Lessor may at any time, by written notice to Lessee, propose the
deletion of particular airlines from the above list of Foreign Air Carriers (as
the same may be amended pursuant to this provision) based upon Lessor's
reasonable judgment. Lessee may at any time, by written notice to Lessor,
propose the addition of particular airlines to such list of Foreign Air Carriers
based upon Lessee's reasonable judgment and which are comparable to the above
airlines.
F-1
<PAGE> 125
(b) If Lessee has not objected in writing to the deletion of a
particular airline proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular airline proposed by Lessee as provided in paragraph (a), in each case
within 30 days after receipt of notice of such proposal, the list of Foreign Air
Carriers shall be deemed amended without further act to delete or add such
airline. If Lessee or Lessor delivers a timely objection in writing to a
proposal made by the other pursuant to paragraph (a), each party agrees to
consult promptly at the request of the other in a good-faith effort to resolve
the disagreement through negotiation; provided, however, that an airline which
Lessor has proposed to delete shall be deleted from such list if there will be
at least twenty (20) (or such lesser number as Lessor and Lessee shall
reasonably determine, if the number of airlines of a type similar to the
airlines listed above which may be included within the definition of Foreign Air
Carriers is substantially reduced as a result of consolidation in the airline
industry) other airlines remaining on such list after giving effect to such
deletion and any other deletions then proposed by Lessor.
(c) Notwithstanding any other provision hereof, no addition shall be
made, and an airline shall be deleted from such list if, such airline would not
be permitted to be a lessee under the provisions of the Lease, and no deletion
of an airline from the list of Foreign Air Carriers pursuant to this Exhibit
shall affect any existing sublease or other agreement providing for transfer of
possession of the Engine or any Part which was permitted under the Lease at the
time entered into, or preclude any subsequent renewal or extension of such
sublease or other agreement.
F-1
<PAGE> 126
EXHIBIT F-2
to
Amended and Restated Engine Lease Agreement
PERMITTED FOREIGN SUBLESSEE DOMICILES
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway Paraguay
Canada People's Republic of China
Chile Philippines
Denmark Portugal
Egypt Republic of China (Taiwan)*
Finland Singapore
France South Africa
Germany South Korea
Greece Spain
Hong Kong Sweden
Hungary Switzerland
Iceland Thailand
India Tobago
Indonesia Trinidad
Ireland United Kingdom
Italy Uruguay
Japan Venezuela
Luxembourg
Malaysia
- ------------------------------------
* So long as on the date of entering into the proposed sublease such
country and the United States of America have diplomatic relations at
least as good as those in effect on the Restatement Date.
(a) Lessor may at any time, by written notice to Lessee,
propose the deletion of a particular country from the above list of Permitted
Foreign Sublessee Domiciles (as the same may be amended pursuant to this
provision) based upon Lessor's reasonable judgment. Lessee may at any time, by
written notice to Lessor, propose the addition of particular countries which are
comparable to the above countries to such list of Permitted Foreign Sublessee
Domiciles based upon Lessee's reasonable judgment.
F-2
<PAGE> 127
(b) If Lessee has not objected in writing to the deletion of a
particular country proposed by Lessor as provided in paragraph (a) of this
Exhibit, or if Lessor has not objected in writing to the addition of a
particular country proposed by Lessee as provided in paragraph (a), in each case
within 30 days after receipt of notice of such proposal, the list of Permitted
Foreign Sublessee Domiciles shall be deemed amended without further act to
delete or add such country. If Lessee or Lessor delivers a timely objection in
writing to a proposal made by the other pursuant to paragraph (a), each party
agrees to consult promptly at the request of the other in a good-faith effort to
resolve the disagreement through negotiation.
(c) Notwithstanding any other provision hereof, and no
deletion of a country from the list of Permitted Foreign Sublessee Domiciles
pursuant to this Exhibit shall affect any existing sublease or other agreement
providing for transfer of possession of the Engine or any Part which was
permitted under the Lease at the time entered into, or preclude any subsequent
renewal or extension of such sublease or other agreement.
F-2
<PAGE> 128
EXHIBIT F-3
to
Amended and Restated Engine Lease Agreement
PERMITTED SUBLESSEE ASSIGNMENT CONSENT
F-3
<PAGE> 129
EXHIBIT G
to
Amended and Restated Engine Lease Agreement
OPINION OF LESSEE'S SPECIAL COUNSEL
G
<PAGE> 130
EXHIBIT H
to
Amended and Restated Engine Lease Agreement
[Intentionally Left Blank]
H
<PAGE> 131
EXHIBIT I
to
Amended and Restated Engine Lease Agreement
[Intentionally Left Blank]
I
<PAGE> 132
EXHIBIT J
to
Amended and Restated Engine Lease Agreement
[Intentionally Left Blank]
J
<PAGE> 133
EXHIBIT K
to
Amended and Restated Engine Lease Agreement
FORM OF ENGINE STATUS REPORT
DELIVERED ENGINE STATUS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ENGINE SERIAL NO.
POSITION AS DELIVERED CURRENT LOCATION & STATUS TOTAL HOURS TOTAL CYCLES
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1
- ----------------------------------------------------------------------------------------------
2
- ----------------------------------------------------------------------------------------------
Spare 1
- ----------------------------------------------------------------------------------------------
Spare 2
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 134
MONTHLY DATA RETURN DOCUMENT
THE FOLLOWING SECTION NEED ONLY BE REPORTED IF ONE OF THE FOLLOWING EVENTS HAS
TAKEN PLACE DURING THE FOREGOING MONTH.
ENGINE REMOVAL AND SHOP VISIT REPORT
OR REMOVED ENGINE
- ------------------------------------------------------------------------------
SERIAL NUMBER DATE OF REMOVAL
- ------------------------------------------------------------------------------
POSITION AIRFRAME TOTAL HOURS
- ------------------------------------------------------------------------------
ENGINE TOTAL HOURS AIRFRAME TOTAL CYCLES AT REMOVAL
- ------------------------------------------------------------------------------
ENGINE TOTAL CYCLES
- ------------------------------------------------------------------------------
REASON FOR REMOVAL
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
REPAIR AGENT LOCATION
- ------------------------------------------------------------------------------
INTENDED WORKSCOPE
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
MODS/ADs/SBs TO BE ACCOMPLISHED
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
OR INSTALLED ENGINE
- ------------------------------------------------------------------------------
SERIAL NUMBER TIME SINCE LAST SHOP VISIT
POSITION LAST SHOP VISIT DESCRIPTION
- ------------------------------------------------------------------------------
ENGINE TOTAL HOURS NEXT LIMITER
- ------------------------------------------------------------------------------
ENGINE TOTAL CYCLES TIME TO NEXT LIMITER
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE> 1
Exhibit 4.24
-----------------------------------------------------------------
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-6]
Dated as of November __, 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
Page
<TABLE>
<S> <C>
GRANTING CLAUSE 3
HABENDUM CLAUSE 7
</TABLE>
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
SECTION 1.01. Special Definitions 9
</TABLE>
ARTICLE II
THE EQUIPMENT NOTES
<TABLE>
<S> <C> <C>
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
</TABLE>
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
<TABLE>
<S> <C> <C>
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 - Page
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
<TABLE>
<S> <C> <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
</TABLE>
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
<TABLE>
<S> <C> <C>
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
</TABLE>
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
<TABLE>
<S> <C> <C>
SECTION 6.01. Acceptance of Trusts and Duties 75
SECTION 6.02. Absence of Duties 75
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents 76
SECTION 6.04. No Segregation of Moneys; No Interest 77
</TABLE>
Trust Indenture
<PAGE> 4
- iii - Page
<TABLE>
<S> <C> <C>
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 State-
ments 78
</TABLE>
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
<TABLE>
<S> <C> <C>
SECTION 7.01. Scope of Indemnification 79
SECTION 7.02. Exculpation and Release of Liability 80
</TABLE>
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
<TABLE>
<S> <C> <C>
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
</TABLE>
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
<TABLE>
<S> <C> <C>
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
</TABLE>
ARTICLE X
MISCELLANEOUS
<TABLE>
<S> <C>
SECTION 10.01. Termination of Indenture 88
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders 89
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
</TABLE>
Trust Indenture
<PAGE> 5
- iv - Page
<TABLE>
<S> <C> <C>
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
</TABLE>
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-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 , 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
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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) amend and restate the First
Amended and Restated Lease pursuant to Amendment No. 1 to Aircraft Lease
Agreement and Termination dated as of the date hereof between the Original Head
Lessee, as assignor and the Original Sublessee, as assignee, the Owner Trustee
and the Indenture Trustee (as so 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);
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
Trust Indenture
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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 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
Trust Indenture
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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, 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 or otherwise, 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); 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
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,
Trust Indenture
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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;
(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
Trust Indenture
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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, the original Second Aircraft Warranty Bill of Sale,
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 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,
Trust Indenture
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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 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.
Trust Indenture
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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 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
Trust Indenture
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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.
"Amortization Schedule" means the amortization schedule for the
Equipment Notes delivered pursuant to Section 2.02 hereof.
Trust Indenture
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"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. Section Section 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.
"Confirmation Agreement" means, collectively, Confirmation No. 1 and
Confirmation No. 2.
Trust Indenture
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"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 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
Trust Indenture
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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.
"Equity Collateral" has the meaning assigned to such term in the
definition of "Excepted Payments."
"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.
"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
Trust Indenture
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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 as 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 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 Guarantor, and its successors and
permitted assigns under the Japanese Financing Documents.
Trust Indenture
<PAGE> 19
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"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, (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
Restated Indenture, and Trust Indenture Supplement No. 3 dated
November __, 1996, which is being filed for
Trust Indenture
<PAGE> 20
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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" shall mean the Lease Agreement dated as
of September 28, 1989 between FG Vision Leasing Co., Ltd., as lessor, and
Air Tara Caymans II, Limited, 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
- 16 -
"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 further amended and restated by Amendment No. 1 to
Aircraft Lease Agreement and Termination dated as of the date hereof and
supplemented by Lease Supplement [GPA 1989 BN-6] No. 3 dated November ___,
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
Trust Indenture
<PAGE> 22
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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 the (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
Trust Indenture
<PAGE> 23
- 18 -
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.
"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.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1989 BN-6] dated as of December 15,
Trust Indenture
<PAGE> 24
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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 December 15, 1989 between
the Original Head Lessee in its capacity as sublessor thereunder and AWA
in its capacity as sublessee.
"Owner Participant" means Chrysler Capital Corporation, 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.
"Principal Amount" with respect to an Equipment Note means the
stated original principal amount of such Equipment
Trust Indenture
<PAGE> 25
- 20 -
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 ___, 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 ___, 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.
Trust Indenture
<PAGE> 26
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"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.
"Second Japanese Lease Assignment" means the Lease Assignment No. 2
dated as of December 15, 1989 between the Original 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
- 22 -
"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]
$___________________
<TABLE>
<S> <C>
DEBT RATE MATURITY DATE
[_________] [________,____]
</TABLE>
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 , 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
- 25 -
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
- 29 -
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
<TABLE>
<S> <C>
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
</TABLE>
[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
- 30 -
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) 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 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
(as defined in the Liquidity Facilities) 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, plus
(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
Trust Indenture
<PAGE> 36
- 31 -
the Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all other
times, zero;
provided, however, neither the numerator nor the denominator of the fractions
in paragraphs (A) or (B) shall include any Series D Equipment Notes. As used
in this Section 2.02, "Net Interest and Related Charges" means (as determined
by the Subordination Agent and notified to the Indenture Trustee) 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 an
unapplied 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), (ii) the amount, if any, by which
interest payable to any Liquidity Provider on any unapplied Downgrade Drawing
(as defined in the Liquidity Facilities) exceeds the Investment Earnings on
such unapplied Downgrade Drawing plus (iii) any amounts payable under Section
2.3(b), 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 defined in the Liquidity Facilities). As used in this Section
2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as
defined in the applicable Indentures) except with respect to that portion of
any Final Drawing (or 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 or an equipment note issued under another 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
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
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
Trust Indenture
<PAGE> 37
- 32 -
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 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
Trust Indenture
<PAGE> 38
- 33 -
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 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.
Trust Indenture
<PAGE> 39
- 34 -
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 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
Trust Indenture
<PAGE> 40
- 35 -
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
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
Trust Indenture
<PAGE> 41
- 36 -
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:
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
Trust Indenture
<PAGE> 42
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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. 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
Trust Indenture
<PAGE> 43
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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 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
Trust Indenture
<PAGE> 44
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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,
Trust Indenture
<PAGE> 45
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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 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
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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 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). 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 other proper charges upon the Trust Indenture Estate
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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 written instructions from the Holders of all
Equipment Notes then
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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. 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).
(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;
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(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 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.
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B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's 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)
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.
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(4) With respect to a Replacement Airframe, a certificate 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 of (or, if the Japanese Lease Agreement is then in effect, the
beneficial ownership of) the Owner Trustee to such Replacement Airframe
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 and protections 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.
(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
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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 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.
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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;
(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
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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 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
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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 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
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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 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
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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, 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
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 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.
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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.
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
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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 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
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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.
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
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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.
(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,
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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 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
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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
(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.
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(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 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, 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
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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 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",
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"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 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
Trust Indenture
<PAGE> 94
- 89 -
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) So long as no Lease Event of Default has occurred and is continuing,
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.
(e) So long as no Indenture Event of Default has occurred and is
continuing, the Indenture Trustee shall, expect as expressly provided in
Section 5.10 (d), not enter into any amendment or supplement to the Lease or
waiver or modification of the terms thereof.
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
Trust Indenture
<PAGE> 95
- 90 -
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.
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.
Trust Indenture
<PAGE> 96
- 91 -
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.
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
Trust Indenture
<PAGE> 97
- 92 -
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 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
Trust Indenture
<PAGE> 98
- 93 -
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 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
Trust Indenture
<PAGE> 99
- 94 -
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 ___, 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:
<TABLE>
<S> <C> <C> <C>
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
</TABLE>
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:
<TABLE>
<S> <C> <C>
Manufacturer Model Manufacturer's
Serial Number
</TABLE>
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 ................ $
Series B ................ $
Series C ................ $
Series D ................ $
</TABLE>
<PAGE> 107
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N626AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
------------------ -------------------------
</TABLE>
<PAGE> 108
SERIES B
Aircraft: N626AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
------------------ -------------------------
</TABLE>
<PAGE> 109
SERIES C
Aircraft: N626AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
------------------ -------------------------
</TABLE>
<PAGE> 110
SERIES D
Aircraft: N626AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
------------------ -------------------------
</TABLE>
<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 ___, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1A, dated November ___, 1996.
2. Pass Through Trust Agreement, dated as of November ___, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1B, dated November ___, 1996.
3. Pass Through Trust Agreement, dated as of November ___, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1C, dated November ___, 1996.
4. Pass Through Trust Agreement, dated as of November ___, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1D, dated November ___, 1996.
Schedule II-1
<PAGE> 1
Exhibit 4.25
- -------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-10]
Dated as of November ___, 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
----
<TABLE>
<S> <C> <C>
GRANTING CLAUSE 3
HABENDUM CLAUSE 7
</TABLE>
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
SECTION 1.01. Special Definitions 9
</TABLE>
ARTICLE II
THE EQUIPMENT NOTES
<TABLE>
<S> <C> <C>
SECTION 2.01. Form of Equipment Notes 20
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
</TABLE>
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
<TABLE>
<S> <C> <C>
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
</TABLE>
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Trust Indenture
<PAGE> 3
Page
----
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
<TABLE>
<S> <C> <C>
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 58
SECTION 4.06. Remedies Cumulative 59
SECTION 4.07. Discontinuance of Proceedings 60
SECTION 4.08. Waiver of Past Indenture Defaults 60
SECTION 4.09. Indenture Trustee May Prove Debt 60
SECTION 4.10. Limitations on Suits by Note Holders 62
SECTION 4.11. Unconditional Right of Note Holders to
Receive Principal, Interest and Premium,
and to Institute Certain Suits 63
SECTION 4.12. Exercise of Remedies by Foreign Note
Holders 63
</TABLE>
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
<TABLE>
<S> <C> <C>
SECTION 5.01. Notice of Indenture Event of Default 63
SECTION 5.02. Action Upon Instructions 65
SECTION 5.03. Indemnification 65
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 66
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts 67
SECTION 5.07. Indenture Supplements for Replacements 70
SECTION 5.08. Effect of Replacement 71
SECTION 5.09. Notices, etc. 71
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant 71
SECTION 5.11. Evidence of Action Taken by Note Holder 74
SECTION 5.12. Right of Revocation of Action Taken 74
</TABLE>
- ii -
Trust Indenture
<PAGE> 4
Page
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
<TABLE>
<S> <C> <C>
SECTION 6.01. Acceptance of Trusts and Duties 74
SECTION 6.02. Absence of Duties 75
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents 75
SECTION 6.04. No Segregation of Moneys; No Interest 76
SECTION 6.05. Reliance; Agents; Advice of Counsel 76
SECTION 6.06. Capacity in Which Acting 77
SECTION 6.07. Compensation 77
SECTION 6.08. May Become Note Holder 78
SECTION 6.09. Further Assurances; Financing
Statements 78
</TABLE>
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
<TABLE>
<S> <C> <C>
SECTION 7.01. Scope of Indemnification 78
SECTION 7.02. Exculpation and Release of Liability 79
</TABLE>
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
<TABLE>
<S> <C> <C>
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
</TABLE>
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
<TABLE>
<S> <C> <C>
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
</TABLE>
- iii -
Trust Indenture
<PAGE> 5
Page
ARTICLE X
MISCELLANEOUS
<TABLE>
<S> <C> <C>
SECTION 10.01. Termination of Indenture 88
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders 89
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 91
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 92
</TABLE>
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 , 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) amend and restate the First Amended
and Restated Lease pursuant to Amendment No. 1 to Aircraft Lease Agreement and
Termination dated as of the date hereof between the Original Head Lessee, as
assignor and the Original Sublessee, as assignee, the Owner Trustee and the
Indenture Trustee (as so 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
Trust Indenture
<PAGE> 9
- 4 -
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 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
Trust Indenture
<PAGE> 10
- 5 -
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 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
Trust Indenture
<PAGE> 11
- 6 -
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 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
Trust Indenture
<PAGE> 12
- 7 -
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 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
Trust Indenture
<PAGE> 13
- 8 -
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 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
Trust Indenture
<PAGE> 14
- 9 -
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.
"Amortization Schedule" means the amortization schedule for the
Equipment Notes delivered pursuant to Section 2.02 hereof.
Trust Indenture
<PAGE> 15
- 10 -
"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 Section 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 Agreement Warranties Assignment of
the transfer of rights under the Purchase Agreement.
Trust Indenture
<PAGE> 16
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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 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 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-
Trust Indenture
<PAGE> 17
BN - 10 INDENTURE
- 12 -
term unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Equity Collateral" has the meaning assigned to such term in the
definition of "Excepted Payments."
"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.
"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) to the extent
retained or approved as provided in Section 8(l) of the Lease payment of
Rent in accordance with the Lease, 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, and (vii) subject to the last sentence of
Section 5.10 hereof,
Trust Indenture
<PAGE> 18
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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
<PAGE> 19
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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
___, 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 further amended and restated by Amendment No. 1 to
Aircraft Lease Agreement and Termination dated as of the date hereof and
supplemented by Lease Supplement [GPA 1989 BN-10] No. 3 dated November __,
1996, which are being filed for recordation as one instrument with the
FAA contemporaneously herewith.
Trust Indenture
<PAGE> 20
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"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 the (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
Trust Indenture
<PAGE> 21
- 16 -
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.
"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
Trust Indenture
<PAGE> 22
- 17 -
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 Chrysler Capital Corporation, 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
<PAGE> 23
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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 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 ___, 1996, among the Lessee, the Original Head
Lessee, the Parent Guarantor, the Owner Trustee, the Pass Through
Trustee, the Owner
Trust Indenture
<PAGE> 24
- 19 -
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 ___, 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 the Principal Amount
and maturities and bearing interest as
Trust Indenture
<PAGE> 25
- 20 -
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
- 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 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
Trust Indenture
<PAGE> 27
- 22 -
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 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 ___, 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
Trust Indenture
<PAGE> 28
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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 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.
Trust Indenture
<PAGE> 29
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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 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
______________
(1) To be inserted in the case of Series B Equipment Notes.
(2) To be inserted in the case of Series C Equipment Notes.
Trust Indenture
<PAGE> 30
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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 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.
* * *
______________
(3) To be inserted in the case of Series D Equipment Notes.
(4) To be inserted in the case of a Series B, Series C or Series D Equipment
Note.
Trust Indenture
<PAGE> 31
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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> 32
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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
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) 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 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
(as defined in the Liquidity Facilities) 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, plus
Trust Indenture
<PAGE> 34
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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 and the denominator of
which is the aggregate principal balance then outstanding of all
Equipment Notes issued under Indentures under which there exists a
Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions
in paragraphs (A) or (B) shall include any Series D Equipment Notes. As used
in this Section 2.02, "Net Interest and Related Charges" means (as determined
by the Subordination Agent and notified by the Indenture Trustee) 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 an
unapplied 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), (ii) the amount, if any, by which
interest payable to any Liquidity Provider on any unapplied Downgrade Drawing
(as defined in the Liquidity Facilities) exceeds the Investment Earnings on
such unapplied Downgrade Drawing plus (iii) any amounts payable under Section
2.3(b), 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 defined in the Liquidity Facilities). As used in this Section
2.02, "Designated Interest Rate" means the weighted average Past Due Rate (as
defined in the applicable Indentures) except with respect to that portion of
any Final Drawing (or 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 or an equipment note issued under another 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
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 Trustee
shall bind the Owner Trustee, notwithstanding that such
Trust Indenture
<PAGE> 35
- 30 -
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> 36
- 31 -
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
Trust Indenture
<PAGE> 37
- 32 -
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 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
Trust Indenture
<PAGE> 38
- 33 -
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 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
Trust Indenture
<PAGE> 39
- 34 -
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
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.
Trust Indenture
<PAGE> 40
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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 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
Trust Indenture
<PAGE> 41
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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 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
Trust Indenture
<PAGE> 42
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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 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
Trust Indenture
<PAGE> 43
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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 each Note Holder of such Equipment Notes to be redeemed or
purchased, at such Note Holder's address appearing in the
Trust Indenture
<PAGE> 44
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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 Indenture Estate,
this Indenture and the Equipment Notes held by
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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 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
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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 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
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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
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
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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). 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.
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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
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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 of
the Equipment Notes shall then be due and payable as therein
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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 reorganization, arrangement, adjustment or
composition affecting
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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 enforce any right under this Indenture, except in
the manner
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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 terms of Sections 2.12, 4.03, 4.04, 4.08, 4.09, 5.03, 5.10 and
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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; 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
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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. 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
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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 such Replacement Engine is the same or an improved model as the
Engine to be released;
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(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) trans
ferring 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, a certificate 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 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 and protections 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.
(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,
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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 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;
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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), (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,
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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.
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
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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 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.
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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, 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 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
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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 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
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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.
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
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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 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
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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.
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
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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.
(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,
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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 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
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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
(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
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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 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, and (iii) the Lessee may effect the re-registration of
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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 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
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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 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
Trust Indenture
<PAGE> 94
- 89 -
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) So long as no Lease Event of Default has occurred and is continuing,
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.
(e) So long as no Indenture Event of Default has occurred and is
continuing, the Indenture Trustee shall, except as expressly provided in
Section 5.10(d), not enter into any amendment or supplement to the Lease or
waiver or modification of the terms thereof.
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
Trust Indenture
<PAGE> 95
- 90 -
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
Trust Indenture
<PAGE> 96
- 91 -
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 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
Trust Indenture
<PAGE> 97
- 92 -
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, 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;
Trust Indenture
<PAGE> 98
- 93 -
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 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
Trust Indenture
<PAGE> 99
- 94 -
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> 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-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 , 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> 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-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> 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-10]
<TABLE>
<S> <C> <C> <C>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
Series A.......... $
Series B.......... $
Series C.......... $
Series D.......... $
</TABLE>
<PAGE> 107
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N631AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
</TABLE>
<PAGE> 108
SERIES B
Aircraft: N631AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
</TABLE>
<PAGE> 109
SERIES C
Aircraft: N631AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
</TABLE>
<PAGE> 110
SERIES D
Aircraft: N631AW
<TABLE>
<S> <C>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
</TABLE>
<PAGE> 111
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 __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1A, dated November __, 1996.
2. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1B, dated November __, 1996.
3. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1C, dated November __, 1996.
4. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1D, dated November __, 1996.
<PAGE> 1
Exhibit 4.26
________________________________________________________________________________
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1990 AWA-13]
Dated as of November , 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
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
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE
Page
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 Aircraft, etc.................... 58
SECTION 4.06. Remedies Cumulative............................ 60
SECTION 4.07. Discontinuance of Proceedings.................. 60
SECTION 4.08. Waiver of Past Indenture Defaults.............. 60
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......................................... 63
SECTION 4.12. Exercise of Remedies by Foreign Note
Holders................................... 63
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
(ii)
<PAGE> 4
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
Page
SECTION 6.01. Acceptance of Trusts and Duties............... 75
SECTION 6.02. Absence of Duties............................. 75
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents....................... 76
SECTION 6.04. No Segregation of Moneys; No Interest......... 76
SECTION 6.05. Reliance; Agents; Advice of Counsel........... 77
SECTION 6.06. Capacity in Which Acting...................... 77
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...................... 78
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
(iii)
<PAGE> 5
ARTICLE X
MISCELLANEOUS
Page
SECTION 10.01. Termination of Indenture.................... 88
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders.................... 89
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................................... 91
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................................ 92
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 , 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-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
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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) amend and restate the Original
Lease pursuant to Amendment No. 1 to Aircraft Lease Agreement and Termination
dated as of the date hereof between the Original Head Lessee, as assignor and
the Original Sublessee, as assignee, the Owner Trustee and the Indenture
Trustee (as so 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
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 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
(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
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),
Trust Indenture
<PAGE> 10
- 5 -
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 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
Trust Indenture
<PAGE> 11
- 6 -
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 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
Trust Indenture
<PAGE> 12
- 7 -
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
Trust Indenture
<PAGE> 13
- 8 -
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 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. Section 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 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
Trust Indenture
<PAGE> 15
- 10 -
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 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
Trust Indenture
<PAGE> 16
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(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 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) to
the extent not applied to the payment of Rent in accordance
Trust Indenture
<PAGE> 17
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with the Lease, 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, (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 the Restatement Date or under the Original Participation Agreement,
the Original Lease, the Parent Head Lease Guaranty or the Sublease (as
such terms are 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, including the Consent and Guaranty (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.
"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 , 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 amended and restated by Amendment No. 1 to
Aircraft Lease Agreement and Termination dated as of the date hereof and
supplemented by Lease Supplement [GPA 1990 AWA-13] No. 3 dated November
, 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.
"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%
Trust Indenture
<PAGE> 20
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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 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
Trust Indenture
<PAGE> 21
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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 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
Trust Indenture
<PAGE> 22
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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 _______
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 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
Trust Indenture
<PAGE> 23
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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 __, 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 __, 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.
Trust Indenture
<PAGE> 24
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"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 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
Trust Indenture
<PAGE> 25
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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
Trust Indenture
<PAGE> 27
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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 First Amended and
Restated Trust Indenture and Security Agreement [GPA 1990 AWA-13], dated as of
November , 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
Trust Indenture
<PAGE> 28
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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 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
Trust Indenture
<PAGE> 29
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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) [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
- 26 -
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
<TABLE>
<CAPTION>
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
<S> <C>
</TABLE>
[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) 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 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 (as defined in
the Liquidity Facilities) 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, plus
(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
Trust Indenture
<PAGE> 33
- 28 -
the Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all other
times, zero;
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. As used in this Section 2.02, "Net Interest and Related
Charges" means 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 an unapplied 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), (ii)
the amount, if any, by which interest payable to any Liquidity Provider on any
unapplied Downgrade Drawing (as defined in the Liquidity Facilities) exceeds
the Investment Earnings on such unapplied Downgrade Drawing plus (iii) any
amounts payable under Section 2.3(b), 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 defined in the Liquidity Facilities).
As used in this Section 2.02, "Designated Interest Rate" means the weighted
average Past Due Rate (as defined in the applicable Indentures) except with
respect to that portion of any Final Drawing (or 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 or an equipment note issued
under another 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 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
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
Trust Indenture
<PAGE> 34
- 29 -
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 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
Trust Indenture
<PAGE> 35
- 30 -
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 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.
Trust Indenture
<PAGE> 36
- 31 -
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 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
Trust Indenture
<PAGE> 37
- 32 -
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
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
Trust Indenture
<PAGE> 38
- 33 -
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 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
Trust Indenture
<PAGE> 39
- 34 -
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. 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
Trust Indenture
<PAGE> 40
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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 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
Trust Indenture
<PAGE> 41
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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, 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,
Trust Indenture
<PAGE> 42
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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, (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
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
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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
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
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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
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
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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, 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
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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 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
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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 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
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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 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
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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 pursuant to clause "second" of Section 3.01 hereof shall be
distributed by wire transfer of funds of the type received by the
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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 suffer to exist any Lessor's Lien
attributable to it in its individual capacity with respect to any of the
properties or
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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 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 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 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
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 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.
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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 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 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
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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.
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
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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) 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
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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). 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
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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, 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.
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
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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 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
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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 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
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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, 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
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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 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
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such discretionary action hereunder. 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).
(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;
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(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 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.
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B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's 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 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, a certificate from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to
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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 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 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 and protections 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.
(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
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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 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.
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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;
(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,
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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 hereof, the Indenture Trustee shall at all times have
the right, to the exclusion of the Owner Trustee and the Owner Participant,
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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 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 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, 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
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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, 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 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.
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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
(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
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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.
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
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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, 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
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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.
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
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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.
(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
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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 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.
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(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
(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
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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 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 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
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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 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
Trust Indenture
<PAGE> 91
- 86 -
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 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
Trust Indenture
<PAGE> 92
- 87 -
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) So long as no Lease Event of Default has occurred and is continuing,
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.
(e) So long as no Indenture Event of Default has occurred and is
continuing, the Indenture Trustee shall not enter into any amendment or
supplement to the Lease or waiver or modification of the terms thereof.
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
Trust Indenture
<PAGE> 93
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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.
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.
Trust Indenture
<PAGE> 94
- 89 -
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.
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
Trust Indenture
<PAGE> 95
- 90 -
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 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
Trust Indenture
<PAGE> 96
- 91 -
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 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
Trust Indenture
<PAGE> 97
- 92 -
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> 98
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> 99
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.
W I T N E S S E T H :
WHEREAS, the Trust Indenture and Security Agreement [GPA 1990 AWA-13]
dated as of September 21, 1990, as amended and restated as of November , 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 Trust Indenture and Security Agreement the
airframe and engines therein described, which Trust Indenture and Security
Agreement 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.
<PAGE> 100
- 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> 101
- 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:
<TABLE>
<CAPTION>
FAA Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ---------------- --------------
<S> <C> <C> <C>
</TABLE>
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:
<TABLE>
<CAPTION>
Manufacturer's
Manufacturer Model Serial Number
------------ ----- --------------
<S> <C> <C>
</TABLE>
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> 102
- 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> 103
- 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> 104
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........... $
Series B........... $
Series C........... $
Series D........... $
Series E........... $
</TABLE>
<PAGE> 105
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N634AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 106
- 2 -
SERIES B
Aircraft: N634AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 107
- 3 -
SERIES C
Aircraft: N634AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 108
- 4 -
SERIES D
Aircraft: N634AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 109
- 5 -
SERIES E
Aircraft: N634AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 110
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 __, 1996, among
America West, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1A, dated November __, 1996.
2. Pass Through Trust Agreement, dated as of November __, 1996, among
America West, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1B, dated November __, 1996.
3. Pass Through Trust Agreement, dated as of November __, 1996, among
America West, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1C, dated November __, 1996.
4. Pass Through Trust Agreement, dated as of November __, 1996, among
America West, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1D, dated November __, 1996.
5. Pass Through Trust Agreement, dated as of November __, 1996, among
America West, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1E, dated November __, 1996.
Schedule II
<PAGE> 1
Exhibit 4.27
_______________________________________________________________________________
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
Dated as of November __, 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 .................................... 20
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 ............ 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 .......................... 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
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 ...................................... 63
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 ...................................... 65
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 .......................... 66
SECTION 5.06. Replacement Engine ................................... 67
SECTION 5.07. Indenture Supplements for Replacements ............... 69
SECTION 5.08. Effect of Replacement ................................ 69
SECTION 5.09. Notices, etc.......................................... 69
SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant. 70
SECTION 5.11. Evidence of Action Taken by Note Holder .............. 72
SECTION 5.12. Right of Revocation of Action Taken .................. 72
(ii)
<PAGE> 4
Page
----
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties ................... 73
SECTION 6.02. Absence of Duties ................................. 74
SECTION 6.03. No Representations or Warranties as to Engine or
Documents ....................................... 74
SECTION 6.04. No Segregation of Moneys; No Interest ............. 75
SECTION 6.05. Reliance; Agents; Advice of Counsel ............... 75
SECTION 6.06. Capacity in Which Acting .......................... 76
SECTION 6.07. Compensation ...................................... 76
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 .......................... 77
SECTION 7.02. Exculpation and Release of Liability .............. 78
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 .................. 80
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures ..................................... 82
SECTION 9.02. Effect of Supplemental Indenture .................. 85
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 ................................ 86
SECTION 9.06. Documents Mailed to Note Holders .................. 86
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement .............. 86
SECTION 9.08. Notices to Liquidity Provider ..................... 86
(iii)
<PAGE> 5
Page
----
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture ............................ 87
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders ........................................... 87
SECTION 10.03. Sale of Engine by Indenture Trustee is Binding ...... 87
SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee
and Note Holders .................................. 88
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease ................................... 88
SECTION 10.06. Notices ............................................. 88
SECTION 10.07. Severability ........................................ 89
SECTION 10.08. No Oral Modifications or Continuing
Waivers ........................................... 89
SECTION 10.09. Successors and Assigns .............................. 89
SECTION 10.10. Headings ............................................ 89
SECTION 10.11. Normal Commercial Relations ......................... 89
SECTION 10.12. Governing Law; Counterpart Form ..................... 90
SECTION 10.13. Section 1110 ........................................ 90
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 , 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) amend and restate the Original
Lease pursuant to Amendment No. 1 to Engine Lease Agreement and Termination
dated as of the date hereof between the Original Head Lessee, as assignor and
the Original Sublessee, as assignee, the Owner Trustee and the Indenture
Trustee (as so 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 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 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
Trust Indenture
<PAGE> 9
- 4 -
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 otherwise,
arising out of any default under any Assigned Sublease;
Trust Indenture
<PAGE> 10
- 5 -
(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 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
Trust Indenture
<PAGE> 11
- 6 -
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 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
Trust Indenture
<PAGE> 12
- 7 -
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 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
Trust Indenture
<PAGE> 13
- 8 -
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 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> 14
- 9 -
"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 Section 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.
"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
Trust Indenture
<PAGE> 15
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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 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.
Trust Indenture
<PAGE> 16
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"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) to
the extent not applied to the payment of Rent in accordance with the
Lease, 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, (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
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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 the Restatement Date or under the Original Participation Agreement,
the Original Lease, the Parent Head Lease Guaranty or the Sublease (as
such terms are 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 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.
Trust Indenture
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"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, 1992, which was recorded as one
instrument by the FAA with the Original Indenture, and Trust Indenture
Supplement No. 2 dated November , 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.
Trust Indenture
<PAGE> 19
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"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 Amendment No. 1 to Engine
Lease Agreement and Termination dated as of the date hereof and
supplemented by Lease Supplement [GPA 1991 AWA-E1] No. 2 dated November ,
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.
"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
Trust Indenture
<PAGE> 20
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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 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.
Trust Indenture
<PAGE> 21
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"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.
"Original Sublessee" means America West Airlines, Inc. ("AWA"), a
Delaware corporation, in its capacity as sublessee under the Engine
Sublease Agreement [GPA 1991 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 _______
corporation, as Owner Participant under the Trust Agreement, and its
successors and permitted assigns.
Trust Indenture
<PAGE> 22
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"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], 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
Trust Indenture
<PAGE> 23
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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 , 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 , 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."
Trust Indenture
<PAGE> 24
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"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 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
Trust Indenture
<PAGE> 25
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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.
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]
$___________________
<TABLE>
<S> <C>
DEBT RATE MATURITY DATE
[ ] [ , ]
</TABLE>
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
Trust Indenture
<PAGE> 26
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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 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 1991 AWA-E1], dated as of
November , 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
Trust Indenture
<PAGE> 27
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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 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.
Trust Indenture
<PAGE> 28
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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 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),
(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> 29
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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 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.
* * *
(4) To be inserted in the case of Series E Equipment Notes.
(5) To be inserted in the case of a Series B, Series C, Series D or Series E
Equipment Note.
Trust Indenture
<PAGE> 30
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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.
FLEET NATIONAL BANK,
as Indenture Trustee
By:_______________________________
Name:
Title:
Trust Indenture
<PAGE> 31
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SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
<TABLE>
<C> <C>
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
</TABLE>
[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) 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 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 (as defined in
the Liquidity Facilities) 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, plus
(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
Trust Indenture
<PAGE> 33
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the Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of all Equipment Notes issued under
Indentures under which there exists a Payment Default or (y) at all other
times, zero;
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. As used in this Section 2.02, "Net Interest and Related
Charges" means 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 an unapplied 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), (ii)
the amount, if any, by which interest payable to any Liquidity Provider on any
unapplied Downgrade Drawing (as defined in the Liquidity Facilities) exceeds
the Investment Earnings on such unapplied Downgrade Drawing plus (iii) any
amounts payable under Section 2.3(b), 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 defined in the Liquidity Facilities).
As used in this Section 2.02, "Designated Interest Rate" means the weighted
average Past Due Rate (as defined in the applicable Indentures) except with
respect to that portion of any Final Drawing (or 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 or an equipment note issued
under another 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 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
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
Trust Indenture
<PAGE> 34
- 29 -
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. 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 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
Trust Indenture
<PAGE> 35
- 30 -
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.
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, 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.
Trust Indenture
<PAGE> 36
- 31 -
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 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
Trust Indenture
<PAGE> 37
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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
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
Trust Indenture
<PAGE> 38
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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 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
Trust Indenture
<PAGE> 39
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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. 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
Trust Indenture
<PAGE> 40
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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 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
Trust Indenture
<PAGE> 41
- 36 -
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, 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 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 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, (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 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
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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
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
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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 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
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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 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,
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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 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
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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 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
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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 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
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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 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.
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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 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
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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;
(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
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(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 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
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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 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
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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
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
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(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 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
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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 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
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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.
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
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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 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.
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(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 have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
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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 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 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
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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). 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 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
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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 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
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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,
(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,
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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 be a party), the Indenture Trustee shall be
held to represent all
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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.
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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 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
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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 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
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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.
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
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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 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 omitted]
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;
(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
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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 omitted]
(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 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
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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 and protections of Section 1110 of the Bankruptcy Code with
respect to the Replacement Engine.
(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 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
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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 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
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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 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
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(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 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
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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, 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
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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, AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH
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
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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
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
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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.
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
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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, 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
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of the Lease from the Lessee's indemnities to the Indenture Trustee 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,
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 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 separate trustees or co-trustee may, at any time by an
instrument in writing, constitute the Indenture Trustee its, his or her
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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 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
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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, 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 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
Trust Indenture
<PAGE> 89
- 84 -
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 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,
Trust Indenture
<PAGE> 90
- 85 -
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) So long as no Lease Event of Default has occurred and is continuing,
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.
(e) So long as no Indenture Event of Default has occurred and is
continuing, the Indenture Trustee shall not enter into any amendment or
supplement to the Lease or waiver or modification of the terms thereof.
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
Trust Indenture
<PAGE> 91
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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 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.
Trust Indenture
<PAGE> 92
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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
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 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.
Trust Indenture
<PAGE> 93
- 88 -
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 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
Trust Indenture
<PAGE> 94
- 89 -
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.
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
Trust Indenture
<PAGE> 95
- 90 -
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 that a construction which would preserve such benefits shall control
over any construction which would not preserve such benefits.
Trust Indenture
<PAGE> 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 _____________________________________
Title:
FLEET NATIONAL BANK,
not in its individual capacity,
except as expressly provided
herein, but solely as Indenture
Trustee
By _____________________________________
Title:
Trust Indenture
<PAGE> 97
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 ___ , 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 Trust Indenture and Security Agreement the
engine therein described, which Trust Indenture and Security Agreement 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.
Trust Indenture
<PAGE> 98
- 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> 99
- 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> 100
- 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> 101
- 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> 102
SCHEDULE I
TO
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1991 AWA-E1]
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
<S> <C> <C> <C>
Series A ........ $
Series B ........ $
Series C ........ $
Series D ........ $
Series E ........ $
</TABLE>
<PAGE> 103
EQUIPMENT NOTES AMORTIZATION
SERIES A
Engine: V0025
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<S> <C>
</TABLE>
<PAGE> 104
- 2 -
SERIES B
Engine: V0025
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<S> <C>
</TABLE>
<PAGE> 105
- 3 -
SERIES C
Engine: V0025
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<S> <C>
</TABLE>
<PAGE> 106
- 4 -
SERIES D
Engine: V0025
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<S> <C>
</TABLE>
<PAGE> 107
- 5 -
SERIES E
Engine: V0025
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
<S> <C>
</TABLE>
<PAGE> 108
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 __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1A, dated November __, 1996.
2. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1B, dated November __, 1996.
3. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1C, dated November __, 1996.
4. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1D, dated November __, 1996.
5. Pass Through Trust Agreement, dated as of November __, 1996, among America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1996-1E, dated November __, 1996.
Schedule II
<PAGE> 1
[Andrews & Kurth Letterhead]
Exhibit 5.1
November 18, 1996
America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Re: America West Airlines, Inc. Registration Statement on Form S-3
America West Airlines 1996-1 Pass Through Trusts
Pass Through Certificates, Series 1996-1
Ladies and Gentlemen:
We have acted as counsel for America West Airlines, Inc., a Delaware
corporation (the "Company"), in connection with a Registration Statement on
Form S-3 (File No. 333-14691) (such Registration Statement, as amended, the
"Registration Statement") originally filed on October 23, 1996 with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), in respect of Pass Through Certificates, Series
1996-1 (the "Certificates"). Each Certificate will represent a fractional
undivided interest in one of the five America West Airlines 1996-1 Pass Through
Trusts (collectively, the "Trusts") to be formed pursuant to a pass through
trust agreement (the "Basic Agreement") and five separate supplements thereto
(each, a "Trust Supplement" and together with the Basic Agreement,
collectively, the "Pass Through Trust Agreements") between the Company and
Fleet National Bank, as trustee under each Pass Through Trust Agreement.
We have examined forms of the Pass Through Trust Agreements and forms
of the Certificates included therein and such other documents, records,
certificates of the Company and public officials and other instruments as we
have deemed necessary for the purposes of rendering this opinion. In all such
examinations, we have assumed the genuineness of all signatures, the authority
to sign of all signatories, the due execution of all original and certified
documents, and the conformity to the original and certified documents of all
copies submitted to us as conformed, photostatic or facsimile copies. In
addition, we have assumed that the Pass Through Trust Agreements will be duly
executed and delivered by each of the parties thereto, that the Certificates
will be duly executed and delivered substantially in the forms contemplated by
the applicable Pass Through Trust Agreements, and that the Certificates will be
sold as described in the Registration Statement. As to various questions of
fact material to our opinion, we have relied upon statements and certificates
of officers of the Company, public officials and others.
<PAGE> 2
America West Airlines, Inc.
November 18, 1996
Page 2
On the basis of the foregoing and subject to the limitations and
qualifications set forth below and assuming the due authorization, execution
and delivery of the Pass Through Trust Agreements by each party thereto and the
due authorization of the Certificates by all necessary action on the part of
the Company, we are of the opinion that, when validly executed, authenticated
and issued in accordance with the applicable Pass Through Trust Agreements and
when sold, the Certificates will be legally issued, fully paid and
non-assessable.
The opinion expressed above is subject to the qualification that we do
not purport to be experts as to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the States of
Texas and New York, and we express no opinion herein as to the effect that the
laws and decisions of courts of any such other jurisdiction may have upon such
opinions.
We consent to the use and filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus contained therein. In giving such consent we
do not imply or admit that we are an expert with respect to any part of the
Registration Statement, including this exhibit, within the meaning of the term
"expert" as used in the Securities Act or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
<PAGE> 1
[Andrews & Kurth Letterhead]
Exhibit 8.1
November 18, 1996
America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, Arizona 85034
Re: America West Airlines, Inc. Registration Statement on Form S-3
America West Airlines 1996-1 Pass Through Trusts
Pass Through Certificates, Series 1996-1
Ladies and Gentlemen:
We have acted as counsel for America West Airlines, Inc., a Delaware
corporation (the "Company"), in connection with a Registration Statement on
Form S-3 (File No. 333-14691) (the "Registration Statement") filed on October
23, 1996 with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), in respect of Pass Through
Certificates, Series 1996-1 (the "Certificates"). Each Certificate will
represent a fractional undivided interest in one of the five America West
Airlines 1996-1 Pass Through Trusts (collectively, the "Trusts") to be formed
pursuant to a pass through trust agreement (the "Basic Agreement") and five
separate supplements thereto (each, a "Trust Supplement" and together with the
Basic Agreement, collectively, the "Pass Through Trust Agreements") between the
Company and Fleet National Bank, as trustee under each Pass Through Trust
Agreement. The property of the Trusts will include, among other things,
equipment notes (the "Equipment Notes") to be issued on a nonrecourse basis by
the trustees (each, an "Owner Trustee") of separate owner trusts. The Equipment
Notes will be issued in up to five series under a separate Indenture (each, an
"Indenture") between the related Owner Trustee and the indenture trustee
thereunder.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of the forms of the Pass Through Trust
Agreements and the forms of Certificates included therein, the forms of
Indentures and such other documents, records, certificates of the Company and
public officials and other instruments as we have deemed necessary for the
purposes of rendering this opinion. In all such examinations, we have assumed
the genuineness of all signatures, the authority to sign of all signatories,
the due execution of all original and certified documents, and the conformity
to the original and certified documents of all copies submitted to us as
conformed, photostatic or facsimile copies. In addition, we have assumed that
the Indentures will be duly executed and delivered by each of the parties
thereto and that the Notes
<PAGE> 2
America West Airlines, Inc.
November 18, 1996
Page 2
will be duly executed and delivered substantially in the forms contemplated by
the respective Indentures. We have also assumed that the Pass Through Trust
Agreements will be duly executed and delivered by each of the parties thereto,
that the Certificates will be duly executed and delivered substantially in the
forms contemplated by the applicable Pass Through Trust Agreements, and that
the Certificates will be sold as described in the Registration Statement. As
to various questions of fact material to our opinion, we have relied upon
statements and certificates of officers of the Company, public officials and
others.
On the basis of the foregoing and subject to the limitations and
qualifications set forth below, we are of the opinion that (i) each Trust will
be classified 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 and not as an
association taxable as a corporation for U.S. federal income tax purposes; and
(ii) the description of federal income tax consequences appearing under the
heading "Certain U.S. Federal Income Tax Consequences" in the prospectus
contained in the Registration Statement relating to the Certificates accurately
describes the material federal income tax consequences to holders of
Certificates under existing law, subject to the qualifications and assumptions
stated therein.
The opinion herein is based upon our interpretations of current law,
including court authority and existing Final and Temporary Regulations, which
are subject to change both prospectively and retroactively, and upon the facts
and assumptions discussed herein. This opinion letter is limited to the
matters set forth herein, and no opinions are intended to be implied or may be
inferred beyond those expressly stated herein. Our opinion is rendered as of
the date hereof and we assume no obligation to update or supplement this
opinion or any matter related to this opinion to reflect any change of fact,
circumstances, or law after the date hereof. In addition, our opinion is based
on the assumption that the matter will be properly presented to the applicable
court. Furthermore, our opinion is not binding on the Internal Revenue Service
or a court. In addition, we must note that our opinion represents merely our
best legal judgment on the matters presented and that others may disagree with
our conclusion. There can be no assurance that the Internal Revenue Service
will not take a contrary position or that a court would agree with our opinion
if litigated. In the event any one of the statements, representations or
assumptions we have relied upon to issue this opinion is incorrect, our opinion
might be adversely affected and may not be relied upon.
We consent to the use and filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus contained therein. In giving such consent we
do not imply or admit that we are an expert with respect to any
<PAGE> 3
America West Airlines, Inc.
November 18, 1996
Page 3
part of the Registration Statement, including this exhibit, within the meaning
of the term "expert" as used in the Securities Act or the rules and regulations
of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ ANDREWS & KURTH, L.L.P.
<PAGE> 1
EXHIBIT 8.2
[SHIPMAN & GOODWIN LLP LETTERHEAD]
November 18, 1996
America West Airlines, Inc.
4000 East Sky Harbor Boulevard
Phoenix, AZ 85034
Re: America West Airlines, Inc. Pass Through Certificates
Ladies and Gentlemen:
We have acted as special counsel to Fleet National Bank, in its individual
capacity and as pass through trustee (the "Pass Through Trustee") of separate
pass through trusts (the "Pass Through Trusts") to be created under Pass
Through Trust Agreement 1996-1 (the "Pass Through Trust Agreement"), and five
separate supplements thereto, between American West Airlines, Inc. (the
"Company") and the Pass Through Trustee for each of the Pass Through Trusts.
Pursuant to the Pass Through Trust Agreement and the supplements thereto, each
Pass Through Trustee will execute, authenticate and deliver pass through
certificates as contemplated by the Company's Registration Statement on Form
S-3, Registration No. 333-14691 (the "Registration Statment"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
As such counsel, we have examined the form of the Pass Through Trust
Agreement which has been filed as an exhibit to the Registration Statement. We
have also examined and relied upon originals, or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or appropriate for purposes of this
opinion. With respect to the discussion in the prospectus forming a part of the
Registration Statement (the "Prospectus") entitled "State Tax Considerations",
the assumption set forth therein are specifically incorporated herein. In
addition, we have assumed that the Pass Through Trusts do not otherwise engage
in business in the State of Connecticut.
Based on the foregoing, we are of the opinion that the discussion in the
Prospectus under the caption entitled "State Tax Considerations", insofar as it
relates to statements of laws or legal conclusions, is correct in all material
respects.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption entitled "State
Tax Considerations" in the Prospectus.
We are attorneys admitted to practice in the State of Connecticut and in
rendering the foregoing opinions we are not opining on the laws of any
jurisdictions other than the State of Connecticut and the federal banking and
trust laws governing banking and trust powers of Fleet National Bank.
Very truly yours,
/s/ SHIPMAN & GOODWIN LLP
-------------------------
Shipman & Goodwin LLP
<PAGE> 1
EXHIBIT 12.1
AMERICA WEST AIRLINES, INC.
Computation of Ratio of Earnings to Fixed Charges
(in thousands except ratio of earnings to fixed charges)
<TABLE>
<CAPTION>
Reorganized Company
--------------------------------------------------------
Nine Months Nine Months Period From
Ended Ended Year Ended August 26 to
September 30, September 30, December 31 December 31,
1995 1995 1994 1994
<S> <C> <C> <C> <C>
Computation of Earnings:
Income (loss) before
income taxes and
extraordinary item
$ 17,690 $ 95,278 $108,378 $19,736
Add:
Interest expense
including
amortization of
debt expense 35,227 45,870 59,418 22,827
Interest portion of
rent expense 68,828 62,430 83,680 26,879
-------- -------- -------- -------
Income (loss), as adjusted $121,745 $203,578 $251,476 $69,442
======== ======== ======== =======
Computation of Fixed
Charges:
Interest expense
including
amortization of
debt expense $ 35,227 $ 45,870 $ 59,418 $22,827
Interest portion of
rent expense 68,828 62,430 83,680 26,879
Capitalized interest 2,404 2,044 2,666 621
-------- -------- -------- -------
Fixed charges $106,459 $110,344 $145,764 $50,327
======== ======== ======== =======
Ratio of earnings to 1.14 1.84 1.73 1.38
fixed charges
</TABLE>
<TABLE>
<CAPTION>
Predecessor Company
-----------------------------------------------
Period From
January 1 to Year Ended December 31,
August 25, ---------------------------------
1994 1993 1992 1991
<S> <C> <C> <C> <C>
Computation of Earnings:
Income (loss) before
income taxes and
extraordinary item
$(201,209) $ 37,924 $(131,761) $(222,016)
Add:
Interest expense
including
amortization of
debt expense 34,038 54,252 55,886 63,991
Interest portion of
rent expense 51,538 81,795 102,314 106,414
--------- -------- --------- ---------
Income (loss), as adjusted $(115,633) $173,971 $ 26,439 $ (51,611)
========= ======== ========= =========
Computation of Fixed
Charges:
Interest expense
including
amortization of
debt expense $ 34,038 $ 54,252 $ 55,886 $ 63,991
Interest portion of
rent expense 51,538 81,795 102,314 106,414
Capitalized interest - - - 6,664
--------- -------- --------- ---------
Fixed charges $ 85,576 $136,047 $ 158,200 $ 177,069
========= ======== ========= =========
Ratio of earnings to (*) 1.28 (*) (*)
fixed charges
</TABLE>
(*) For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income (loss) before income taxes and extraordinary
item plus fixed charges less capitalized interest. "Fixed charges" consist
of interest expense including amortization of debt expense, one-third of
rent expense, which is deemed to be representative of an interest factor,
and captalized interest. For the period ended August 25, 1994 earnings
were insufficient to cover fixed charges by $201.2 million. For the years
ended December 31, 1992 and 1991 earnings were insufficient to cover fixed
charges by $131.8 million and $228.7 million, respectively.
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
----------
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------
/ / CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)
FLEET NATIONAL BANK
---------------------------------------------------------
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
Not applicable 04-317415
- ------------------------------- -----------------------------
(State of incorporation (I.R.S. Employer
if not a national bank) Identification No.)
One Monarch Place, Springfield, MA 01102
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Pat Beaudry, 777 Main Street, Hartford, CT 06115 (203) 728-2065
--------------------------------------------------------------
(Name, address and telephone number of agent for service)
AMERICA WEST AIRLINES, INC.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 86-0418245
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034
- ---------------------------------------- -----------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Pass Through Certificates
------------------------------------------------------------------
(Title of the indenture securities)
<PAGE> 2
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject,
The Comptroller of the Currency,
Washington, D.C.
Federal Reserve Bank of Boston
Boston, Massachusetts
Federal Deposit Insurance Corporation
Washington, D.C.
(b) Whether it is authorized to exercise
corporate trust powers:
The trustee is so authorized.
Item 2. Affiliations with obligor and underwriter. If the obligor or
any underwriter for the obligor is an affiliate of the trustee,
describe each such affiliation.
None with respect to the trustee.
Item 16. List of exhibits.
List below all exhibits filed as a part of this statement of
eligibility and qualification.
(1) A copy of the Articles of Association of the trustee as
now in effect.
(2) A copy of the Certificate of Authority of the trustee
to do business.
(3) A copy of the Certification of Fiduciary Powers of the
trustee.
(4) A copy of the By-Laws of the trustee as now in effect.
(5) Consent of the trustee required by Section 321(b)
of the Act.
(6) A copy of the latest Consolidated Reports of Condition
and Income of the trustee published pursuant to law or
the requirements of its supervising or examining authority.
NOTES
In as much as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base answers to Item 2, the answers to said Items are
based upon imcomplete information. Said Items may, however, be considered
correct unless amended by an amendment to this Form T-1.
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939,
the trustee, Fleet National Bank, a national banking association organized and
existing under the laws of the United States, has duly caused this statement of
of eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Hartford, and State of
Connecticut, on the day of November, 1996.
FLEET NATIONAL BANK,
AS TRUSTEE
By: /s/ Mark A. Forgetta
-------------------------
Mark A. Forgetta
Its: Vice President
<PAGE> 4
EXHIBIT 1
ARTICLES OF ASSOCIATION
OF
FLEET NATIONAL BANK
FIRST. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "Fleet National Bank."
SECOND. The main office of the Association shall be in Springfield, Hampden
County Commonwealth of Massachusetts. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less
than five (5) nor more than twenty-five (25) shareholders, the exact number of
directors within such minimum and maximum limits to be fixed and determined
from time to time by resolution of a majority of the full board of directors or
by resolution of the shareholders at any annual or special meeting thereof.
Unless otherwise provided by the laws of the United States, any vacancy in the
board of directors for any reason, including an increase in the number thereof,
may be filled by action of the board of directors.
FOURTH. The annual meeting of the shareholders for the election of directors
and the transaction of whatever other business may be brought before said
meeting shall be held at the main office or such other place as the board of
directors may designate, on the day of each year specified therefore in the
bylaws, but if no election is held on that day, it may be held on any
subsequent day according to the provisions of law; and all elections shall be
held according to such lawful regulations as may be prescribed by the board of
directors.
FIFTH. The authorized amount of capital stock of this Association shall be
eight million five hundred thousand (8,500,000) shares of which three million
five hundred thousand (3,500,000) shares shall be common stock with a
par value of six and 25/100 dollars ($6.25) each, and of which five million
(5,000,000) shares without par value shall be preferred stock. The capital
stock may be increased or decreased from time to time, in accordance with
the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any pre-emptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion, may from time to time determine and at such
price as the board of directors may from time to time fix.
<PAGE> 5
The board of directors of the Association is authorized, subject to limitations
prescribed by law and the provisions of this Article, to provide for the
issuance from time to time in one or more series of any number of the preferred
shares, and to establish the number of shares be included in each series, and
to fix the designation, relative rights, preferences, qualifications and
limitations of the shares of each such series. The authority of the board of
directors with respect to each series shall include, but not be limited to,
determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and whether they shall be
payable in preference to, or in another relation to, the dividends payable
to any other class or classes or series of stock;
c. Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
d. Whether that series shall have conversion or exchange privileges, and,
if so, the terms and conditions of such conversion or exchange, including
provision for the adjustment of the conversion or exchange rate in such
events as the board of directors shall determine;
e. Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the manner of
selecting shares for redemption if less than all shares are to be redeemed,
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
f. Whether that series shall be entitled to the benefit of a sinking fund to
be applied to the purchase or redemption of shares of that series, and, if
so, the terms and amounts of such sinking fund;
g. The right of the shares of that series to the benefit of conditions and
restrictions upon the creation of indebtedness of the Association or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon the payment of
dividends or the making of other distributions on, and the purchase,
redemption or other acquisition by the Association or any subsidiary of
any outstanding stock of the Association;
h. The right of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Association and
whether such rights shall be in preference to, or in another relation to,
the comparable rights of any other class or classes or series of stock; and
i. Any other relative, participating, optional or other special rights,
qualifications, limitations or restrictions of that series.
Shares of any series of preferred stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of preferred stock of the same series and may be reissued as a part of
the series of which they were originally a part or may be reclassified and
reissued as part of a new series of preferred stock to be created by resolution
or resolutions of the board of directors or as part of any other series or
preferred stock, all subject to the conditions and the restrictions adopted by
the board of directors providing for the issue of any series of preferred
stock and by the provisions of any applicable law.
Subject to the provisions of any applicable law, or except as otherwise
provided by the resolution or resolutions providing for the issue of any series
of preferred stock, the holders of outstanding shares of common stock shall
exclusively possess voting power for the election of directors and for all
purposes, each holder of record of shares of common stock being entitled to one
vote for each share of common stock standing in his name on the books of the
Association.
Except as otherwise provided by the resolution or resolutions providing for the
issue of any series of preferred stock, after payment shall have been made to
the holders of preferred stock of the full amount of dividends to which they
shall be entitled pursuant to the resolution or resolutions providing for the
issue of any other series of preferred stock, the holders of common stock shall
be entitled, to the exclusion of the holders of preferred stock of any and all
series, to receive such dividends as from time to time may be declared by the
board of directors.
Except as otherwise provided by the resolution or resolutions for the issue
of any series of preferred stock, in the event of any liquidation, dissolution
or winding up of the Association, whether voluntary or involuntary, after
payment shall have been made to the holders of preferred stock of the full
amount to which they shall be entitled pursuant to the resolution or
resolutions providing for the issue of any series of preferred stock the
holders of common stock shall be entitled, to the exclusion of the holders of
preferred stock of any and all series, to share, ratable according to the
number of shares of common stock held by them, in all remaining assets of the
Association available for distribution to its shareholders.
The number of authorized shares of any class may be increased or decreased by
the affirmative vote of the holders of a majority of the stock of the
Association entitled to vote.
<PAGE> 6
SIXTH. The board of directors shall appoint one of its members president of
this Association, who shall be chairman of the board, unless the board appoints
another director to be the chairman. The board of directors shall have the
power to appoint one or more vice presidents; and to appoint a secretary and
such other officers and employees as may be required to transact the business
of this Association.
The board of directors shall have the power to define the duties of the
officers and employees of the Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of the
Association shall be made; to manage and administer the business and affairs of
the Association; to make all bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a board of
directors to do and perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Hartford,
Connecticut, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of the Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The board of directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten percent (10%) of the
stock of this Association, may call a special meeting of shareholders at any
time. Unless otherwise provided by the laws of the United States, a notice of
the time, place and purpose of every annual and special meeting of the
shareholders shall be given by first class mail, postage prepaid, mailed at
least ten (10) days prior to the date of such meeting to each shareholder of
record at his address as shown upon the books of this Association.
TENTH. (a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she is or was a director, officer or employee of the Association or is or was
serving at the request of the Association as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, including service with respect
to an employee benefit plan, shall be indemnified and held harmless by the
Association to the fullest extent authorized by the law of the state in which
the Association's ultimate parent company is incorporated, except as provided
in subsection (b). The aforesaid indemnity shall protect the indemnified
person against all expense, liability and loss (including attorney's fees,
judgements, fines ERISA excise taxes or penalties, and amounts paid in
settlement) reasonably incurred by such person in connection with such a
proceeding. Such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of his or
her heirs, executors, and administrators, but shall only cover such person's
period of service with the Association. The Association may, by action of its
Board of Directors, grant rights to indemnification to agents of the
Association and to any director, officer, employee or agent of any of its
subsidiaries with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) Restrictions on Indemnification. Notwithstanding the foregoing, (i) no
person shall be indemnified hereunder by the Association against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by a federal bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties against that person,
requiring affirmative action by that person in the form of payments to the
Association, or removing or prohibiting that person from service with the
Association, and any advancement of expenses to that person in that proceeding
must be repaid; and (ii) no person shall be indemnified hereunder by the
Association and no advancement of expenses shall be made to any person
hereunder to the extent such indemnification or advancement of expenses would
violate or conflict with any applicable federal statute now or hereafter in
force or any applicable final regulation or interpretation now or hereafter
adopted by the Office of the Comptroller of the Currency ("OCC") or the Federal
Deposit Insurance Corporation ("FDIC"). The Association shall comply with any
requirements imposed on it by any such statue or regulation in connection with
any indemnification or advancement of expenses hereunder by the Association.
With respect to proceedings to enforce a claimant's rights to indemnification,
the Association shall indemnify any such claimant in connection with such a
proceeding only as provided in subsection (d) hereof.
(c) Advancement of Expenses. The conditional right to indemnification
conferred in this section shall be a contract right and shall include the
right to be paid by the Association the reasonable expenses (including
attorney's fees) incurred in defending a proceeding in advance of its final
disposition (an "advancement of expenses"); provided, however, that an
advancement of expenses shall be made only upon (i) delivery to the Association
of a binding written undertaking by or on behalf of the person receiving the
advancement to repay all amounts so advanced if it is ultimately determined
that such person is not entitled to be indemnified in such proceeding,
including if such proceeding results in a final order assessing civil money
penalties against that person, requiring affirmative action by that person
in the form of payments to the Association, or removing or prohibiting that
person from service with the Association, and (ii) compliance with any other
actions or determinations required by applicable law, regulation or OCC or FDIC
interpretation to be taken or made by the Board of Directors of the Association
or other persons prior to an advancement of expenses. The Association shall
cease advancing expenses at any time its Board of Directors believes that any
of the prerequisites for advancement of expenses are no longer being met.
(d) Right of Claimant to Bring Suit. If a claim under subsection (a) of the
section is not paid in full by the Association within thirty (30) days after
written claim has been received by the Association, the claimant may at any time
thereafter bring suit against the Association to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a
suit brought by the Association to recover an advancement of expenses pursuant
to the terms of an undertaking, the claimant shall be entitled to be paid also
the expense of prosecuting or defending such claim. It shall be a defense to
any such action brought by the claimant to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for an advancement
of expenses where the required undertaking, if any, has been tendered to the
Association) that the claimant has not met any applicable standard for
indemnification under the law of the state in which the Association's ultimate
parent company is incorporated. In any suit brought by the Association to
recover an advancement of expenses pursuant to the terms of an undertaking, the
Association shall be entitled to recover such expenses upon a final
adjudication that the claimant has not met any applicable standard for
indemnification standard for indemnification under the law of the state in
which the Association's ultimate parent company is incorporated.
(e) Non-Exclusivity of Rights. The rights to indemnification and the
advancement of expenses conferred in this section shall not be exclusive of any
other right which any person may have or hereafter acquired under any statute,
agreement, vote of stockholders or disinterested directors or otherwise.
(f) Insurance. The Association may purchase, maintain, and make payment or
reimbursement for reasonable premiums on, insurance to protect itself and any
director, officer, employee or agent of the Association or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Association would have the power to
indemnify such person against such expense, liability or loss under the law of
the state in which the Association's ultimate parent company is incorporated;
provided however, that such insurance shall explicitly exclude insurance
coverage for a final order of a federal bank regulatory agency assessing civil
money penalties against an Association director, officer, employee or agent.
ELEVENTH. These articles of association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The notice of any shareholders' meeting at
which an amendment to the articles of association of this Association is to be
considered shall be given as hereinabove set forth.
I hereby certify that the articles of association of this Association, in their
entirety, are listed above in items first through eleventh.
Secretary/Assistant Secretary
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Dated at , as of .
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Revision of February 15, 1996
<PAGE> 7
EXHIBIT 2
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
- --------------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
that:
(1) The Comptroller of the Currency, pursuant to Revised Statutes
324, et seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession,
custody and control of all records pertaining to the chartering, regulation and
supervision of all National Banking Associations.
(2) "Fleet National Bank", (Charter No. 1338), is a National Banking
Association formed under the laws of the United States and is authorized
thereunder to transact the business of banking on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at
the Treasury Department, in the City of
Washington and District of Columbia, this
3rd day of October, 1996.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE> 8
EXHIBIT 3
[LOGO]
- --------------------------------------------------------------------------------
COMPTROLLER OF THE CURRENCY
ADMINISTRATOR OF NATIONAL BANKS
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Washington, D.C. 20219
Certification of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify
the records in this Office evidence "Fleet National Bank",
(Charter No. 1338), was granted, under the hand
and seal of the Comptroller, the right to act in all fiduciary capacities
authorized under the provisions of The Act of Congress approved
September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a. I further certify the
authority so granted remains in full force and effect.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
Office of the Comptroller of the Currency
to be affixed to these presents at the
Treasury Department, in the City of
Washington and District of Columbia, this
3rd day of October, 1996.
/s/ EUGENE A. LUDWIG
----------------------------------
Comptroller of the Currency
<PAGE> 9
EXHIBIT 4
AMENDED AND RESTATED BY-LAWS OF
FLEET NATIONAL BANK
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders for
the election of Directors and the transaction of any other business that may
properly come before the meeting shall be held at the Main Office of the
Association, or such other place as the Board of Directors may designate, on
the fourth Thursday of April in each year at 1:15 o'clock in the afternoon
unless some other hour of such day is fixed by the Board of Directors.
If, from any cause, an election of Directors is not made on such day, the Board
of Directors shall order the election to be held on some subsequent day, of
which special notice shall be given in accordance with the provisions of law,
and of these bylaws.
Section 2. Special Meetings. Special meetings of the shareholders may be called
at any time by the Board of Directors, the President, or any shareholders
owning not less than twenty-five percent (25%) of the stock of the Association.
Section 3. Notice of Meetings of Shareholders. Except as otherwise provided
by law, notice of the time and place of annual or special meetings of the
shareholders shall be mailed, postage prepaid, at least ten (10) days before
the date of the meeting to each shareholder of record entitled to vote thereat
at his address as shown upon the books of the Association; but any failure to
mail such notice to any shareholder or any irregularity therein, shall not
affect the validity of such meeting or of any of the proceedings thereat.
Notice of a special meeting shall also state the purpose of the meeting.
Section 4. Quorum; Adjourned Meetings. Unless otherwise provided by law, a
quorum for the transaction of business at every meeting of the shareholders
shall consist of not less than two-fifths (2/5) of the outstanding capital
stock represented in person or by proxy; less than such quorum may adjourn the
meeting to a future time. No notice need be given of an adjourned annual or
special meeting of the shareholders if the adjournment be to a definite place
and time.
Section 5. Votes and Proxies. At every meeting of the shareholders, each
share of the capital stock shall be entitled to one vote except as otherwise
provided by law. A majority of the votes cast shall decide every question
or matter submitted to the shareholder at any meeting, unless otherwise
provided by law or by the Articles of Association or these By-laws. Share-
holders may vote by proxies duly authorized in writing and filed with the
Cashier, but no officer, clerk, teller or bookeeper of the Association may act
as a proxy.
<PAGE> 10
Section 6. Nominations to Board of Directors. At any meeting of shareholders
held for the election of Directors, nominations for election to the Board of
Directors may be made, subject to the provisions of this section, by any share-
holder of record of any outstanding class of stock of the Association entitled
to vote for the election of Directors. No person other than those whose names
are stated as proposed nominees in the proxy statement accompanying the notice
of the meeting may be nominated as such meeting unless a shareholder shall have
given to the President of the Association and to the Comptroller of the
Currency, Washington, DC written notice of intention to nominate such other
person mailed by certified mail or delivered not less than fourteen (14) days
nor more than fifty (50) days prior to the meeting of shareholders at which
such nomination is to be made; provided, however, that if less than twenty-one
(21) days' notice of such meeting is given to shareholders, such notice of
intention to nominate shall be mailed by certified mail or delivered to said
President and said Comptroller on or before the seventh day following the day
on which the notice of such meeting was mailed. Such notice of intention to
nominate shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the Association that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the Association owned by the
notifying shareholder. In the event such notice is given, the proposed nominee
may be nominated either by the shareholder giving such notice or by any other
shareholder present at the meeting at which such nomination is to be made.
Such notice may contain the names of more than one proposed nominee, and if
more than one is named, any one or more of those named may be nominated.
Section 7. Action Taken Without a Shareholder Meeting. Any action requiring
shareholder approval or consent may be taken without a meeting and without
notice of such meeting by written consent of the shareholders.
ARTICLE II
DIRECTORS
Section 1. Number. The Board of Directors shall consist of such number of
shareholders, not less than five (5) nor more than twenty-five (25), as from
time to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled, or by the Board of Directors as
hereinafter provided.
Section 2. Mandatory Retirement for Directors. No person shall be elected a
director who has attained the age of 68 and no person shall continue to serve
as a director after the date of the first meeting of the stockholders of the
Association held on or after the date on which such person attains the age of
68; provided, however, that any director serving on the Board as of December
15, 1995 who has attanined the age of 65 on or prior to such date shall be
permitted to continue to serve as a director until the date of the first
meeting of the stockholders of the Association held on or after the date on
which such person attains the age of 70.
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<PAGE> 11
Section 3. General Powers. The Board of Directors shall exercise all the
coporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and dispositon of all its
property and affairs.
Section 4. Annual Meeting. Immediately following a meeting of shareholders
held for the election of Directors, the Cashier shall notify the directors-
elect who may be present of their election and they shall then hold a meeting
at the Main Office of the Association, or such other place as the Board of
Directors may designate, for the purpose of taking their oaths, organizing the
new Board, electing officers and transacting any other business that may come
before such meeting.
Section 5. Regular Meeting. Regular meetings of the Board of Directors shall
be held without notice at the Main Office of the Association, or such other
place as the Board of Directors may designate, at such dates and times as the
Board shall determine. If the day designated for a regular meeting falls on a
legal holiday, the meeting shall be held on the next business day.
Section 6. Special Meetings. A special meeting of the Board of Directors may
be called at anytime upon the written request of the Chairman of the Board, the
President, or of two Directors, stating the purpose of the meeting. Notice of
the time and place shall be given not later than the day before the date of the
meeting, by mailing a notice to each Director at his last known address, by
delivering such notice to him personally, or by telephoning.
Section 7. Quorum; Votes. A majority of the Board of Directors at the time
holding office shall constitute a quorum for the transaction of all business,
except when otherwise provided by law, but less than a quorum may adjourn
a meeting from time to time, and the meeting may be held, as adjourned, without
further notice. If a quorum is present when a vote is taken, the affirmative
vote of a majority of Directors present is the act of the Board of Directors.
Section 8. Action by Directors Without a Meeting. Any action requiring
Director approval or consent may be taken without a meeting and without notice
of such meeting by written consent of all the Directors.
Section 9. Telephonic Participation in Directors' Meetings. A Director or
member of a Committee of the Board of Directors may participate in a meeting of
the Board or of such Committee may participate in a meeting of the Board or of
such Committee by means of a conference telephone or similar communications
equipment enabling all Directors participating in the meeting to hear one
another, and participation in such a meeting shall constitute presence in person
at such a meeting.
Section 10. Vacancies. Vacancies in the Board of Directors may be filled by
the remaining members of the Board at any regular or special meeting of the
Board.
Section 11. Interim Appointments. The Board of Directors shall, if the share-
holders at any meeting for the election of Directors have determined a number
of Directors less than twenty-five (25), have the power, by affirmative vote of
the majority of all the Directors, to increase such number of Directors to not
more than twenty-five (25) and to elect Directors to fill the resulting
vacancies and to serve until the next annual meeting of shareholders or the
next election of Directors; provided, however, that the number of Directors
shall not be so increased by more than two (2) if the number last determined
by shareholders was fifteen (15) or less, or increased by more than four (4) if
the number last determined by shareholders was sixteen (16) or more.
Section 12. Fees. The Board of Directors shall fix the amount and direct the
payment of fees which shall be paid to each Director for attendance at any
meeting of the Board of Directors or of any Committees of the Board.
ARTICLE III
COMMITTEES OF THE BOARD
Section 1. Executive Committee. The Board of Directors shall appoint from its
members an Executive Committee which shall consist of such number of persons as
the Board of Directors shall determine; the Chairman of the Board and the
President shall be members ex-officio of the Executive Committee with full
voting power. The Chairman of the Board or the President may from time to time
appoint from the Board of Directors as temporary additional members of the
Executive Committee, with full voting powers, not more than two members to serve
for such periods as the Chairman of the Board or the President may determine.
The Board of Directors shall designate a member of the Executive Committee to
serve as Chairman thereof. A meeting of the Executive Committee may be called
at any time upon the written request of the Chairman of the Board, the President
or the Chairman of the Executive Committee, stating the purpose of the meeting.
Not less than twenty four hours' notice of said meeting shall be given to each
member of the Committee personally, by telephoning, or by mail. The Chairman of
the Executive Committee or, in his absence, a member of the Committee chosen by
a majority of the members present shall preside at meetings of the Executive
Committee.
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<PAGE> 12
The Executive Committee shall possess and may exercise all the powers of the
Board when the Board is not in session except such as the Board, only, by law,
is authorized to exercise; it shall keep minutes of its acts and proceedings
and cause same to be presented and reported at every regular meeting and at any
special meeting of the Board including specifically, all its actions relating
to loans and discounts.
All acts done and powers and authority conferred by the Executive Committee,
from time to time, within the scope of its authority, shall be deemed to be,
and may be certified as being, the acts of and under the authority of the
Board.
Section 2. Risk Management Committee. The Board shall appoint from its
members a Risk Management Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Risk
Management Committee to serve as Chairman thereof. It shall be the duty of the
Risk Management Committee to (a) serve as the channel of communication with
management and the Board of Directors of Fleet Financial Group, Inc. to assure
that formal processes supported by management information systems are in place
for the identification, evaluation and management of significant risks inherent
in or associated with lending activities, the loan portfolio, asset-liablity
management, the investment portfolio, trust and investment advisory activities,
the sale of nondeposit investment products and new products and services and
such additional activities or functions as the Board may determine from time
to time; (b) assure the formulation and adoption of policies approved by the
Risk Management Committee or Board governing lending activities, management of
the loan portfolio, the maintenance of an adequate allowance for loan and lease
losses, asset-liability management, the investment portfolio, the retail
sale of non-deposit investment products, new products and services and such
additional activities or functions as the Board may determine from time to time
(c) assure that a comprehensive independent loan review program is in place for
the early detection of problem loans and review significant reports of the loan
review department, management's responses to those reports and the risk
attributed to unresolved issues; (d) subject to control of the Board, exercise
general supervision over trust activities, the investment of trust funds, the
disposition of trust investments and the acceptance of new trusts and the terms
of such acceptance, and (e) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 3. Audit Committee. The Board shall appoint from its members and
Audit Committee which shall consist of such number as the Board shall determine
no one of whom shall be an active officer or employee of the Association or
Fleet Financial Group, Inc. or any of its affiliates. In addition, members of
the Audit Committee must not (i) have served as an officer or employee of the
Association or any of its affiliates at any time during the year prior to their
appointment; or (ii) own, control, or have owned or controlled at any time
during the year prior to appointment, ten percent (10%) or more of any
outstanding class of voting securities of the Association. At least two (2)
members of the Audit Committee must have significant executive, professional,
educational or regulatory experience in financial, auditing, accounting,
or banking matters. No member of the Audit Commitee may have significant
direct or indirect credit or other relationships with the Association, the
termination of which would materially adversely affect the Association's
financial condition or results of operations.
The Board shall designate a member of the Audit Committee to serve as Chairman
thereof. It shall be the duty of the Audit Committee to (a) cause a continuous
audit and examination to be made on its behalf into the affairs of the
Association and to review the results of such examination; (b) review
significant reports of the internal auditing department, management's responses
to those reports and the risk attributed to unresolved issues; (c) review the
basis for the reports issued under Section 112 of The Federal Deposit Insurance
Corporation Improvement Act of 1991; (d) consider, in consultation with the
independent auditor and an internal auditing executive, the adequacy of the
Association's internal controls, including the resolution of identified material
weakness and reportable conditions; (e) review regulatory communications
received from any federal or state agency with supervisory jurisdiction or
other examining authority and monitor any needed corrective action by
management; (f) ensure that a formal system of internal controls is in place
for maintaining compliance with laws and regulations; (g) cause an audit of the
Trust Department at least once during each calendar year and within 15 months
of the last such audit or, in liew thereof, adopt a continuous audit system and
report to the Board each calendar year and within 15 months of the previous
report on the performance of such audit function; and (h) perform such
additional duties and exercise such additional powers of the Board as the Board
may determine from time to time.
The Audit Committee may consult with internal counsel and retain its own
outside counsel without approval (prior or otherwise) from the Board or
management and obligate the Association to pay the fees of such counsel.
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<PAGE> 13
Section 4. Community Affairs Committee. The Board shall appoint from its
members a Community Affairs Committee which shall consist of such number as the
Board shall determine. The Board shall designate a member of the Community
Affairs Committee to serve as Chairman thereof. It shall be the duty of the
Commmunity Affairs Committee to (a) oversee compliance by the Association with
the Community Reinvestment Act of 1977, as amended, and the regulations
promulgated thereunder; and (b) perform such additional duties and exercise such
additional powers of the Board as the Board may determine from time to time.
Section 5. Regular Meetings. Except for the Executive Committee which shall
meet on an ad hoc basis as set forth in Section 1 of this Article, regular
meetings of the Committees of the Board of Directors shall be held, without
notice, at such time and place as the Committee or the Board of Directors may
appoint and as often as the business of the Association may require.
Section 6. Special Meetings. A Special Meeting of any of the Committees of
the Board of Directors may be called upon the written request of the Chairman
of the Board or the President, or of any two members of the respective
Committee, stating the purpose of the meeting. Not less than twenty-four
hours' notice of such special meeting shall be given to each member of the
Committee personally, by telephoning, or by mail.
Section 7. Emergency Meetings. An Emergency Meeting of any of the Committees
of the Board of Directors may be called at the request of the Chairman of the
Board or the President, who shall state that an emergency exists, upon not
less than one hour's notice to each member of the Committee personally or by
telephoning.
Section 8. Action Taken Without a Committee Meeting. Any Committee of the
Board of Directors may take action without a meeting and without notice of such
meeting by resolution assented to in writing by all members of such Committee.
Section 9. Quorum. A majority of a Committee of the Board of Directors shall
constitute a quorum for the transaction of any business at any meeting of such
Committee. If a quorum is not available, the Chairman of the Board or the
President shall have power to make temporary appointments to a Committee of-
members of the Board of Directors, to act in the place and stead of members who
temporarily cannot attend any such meeting; provided, however, that any
temporary appointment to the Audit Committee must meet the requirements for
members of that Committee set forth in Section 3 of this Article.
Section 10. Record. The committes of the Board of Directors shall keep a
record of their respective meetings and proceedings which shall be presented
at the regular meeting of the Board of Directors held in the calendar month
next following the meetings of the Committees. If there is no regular Board
of Directors meeting held in the calendar month next following the meeting of
a Committee, then such Committee's records shall be presented at the next
regular Board of Directors meeting held in a month subsequent to such Committee
meeting.
Section 11. Changes and Vacancies. The Board of Directors shall have power
to change the members of any Committee at any time and to fill vacancies on any
Committee; provided, however, that any newly appointed member of the Audit
Committee must meet the requirements for members of that Committee set forth in
Section 3 of this Article.
Section 12. Other Committees. The Board of Directors may appoint, from time
to time, other committees of one or more persons, for such purposes and with
such powers as the Board may determine.
ARTICLE IV
WAIVER OF NOTICE OF MEETINGS
Section 1. Waiver. Whenever notice is required to be given to any shareholder,
Director, or member of a Committee of the Board of Directors, such notice may
be waived in writing either before or after such meeting by any shareholder,
Director or Committee member respectively, as the case may be, who may be
entitled to such notice; and such notice will be deemed to be waived by
attendance at any such meeting.
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<PAGE> 14
ARTICLE V
OFFICERS AND AGENTS
Section 1. Officers. The Board shall appoint a Chairman of the Board and a
President, and shall have the power to appoint one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a
Cashier, a Secretary, an Auditor, a Controller, one or more Trust Officers and-
such other officers as are deemed necessary or desirable for the proper
transaction of business of the Association. The Chairman of the Board and the
President shall be appointed from members of the Board of Directors. Any two
or more offices, except those of President and Cashier, or Secretary, may be
held by the same person. The Board may, from time to time, by resolution
passed by a majority of the entire Board, designate one or more officers of the
Association or of an affiliate or of Fleet Financial Group, Inc. with power to
appoint one or more Vice Presidents and such other officers of the Association
below the level of Vice President as the officer or officers designated in such
resolution deem necessary or desirable for the proper transaction of the
business of the Association.
Section 2. Chairman of the Board. The chairman of the Board shall preside at
all meetings of the Board of Directors. Subject to definition by the Board of
Directors, he shall have general executive powers and such specific powers and
duties as from time to time may be conferred upon or assigned to him by the
Board of Directors.
Section 3. President. The President shall preside at all meetings of the
Board of Directors if there be no Chairman or if the Chairman be absent.
Subject to definition by the Board of Directors, he shall have general
executive powers and such specific powers and duties as from time to time may
be conferred upon or assigned to him by the Board of Directors.
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<PAGE> 15
Section 4. Cashier and Secretary. The Cashier shall be the Secretary of the
Board and of the Executive Committee, and shall keep accurate minutes of their
meetings and of all meetings of the shareholders. He shall attend to the
giving of all notices required by these By-laws. He shall be custodian of the
corporate seal, records, documents and papers of the Association. He shall
have such powers and perform such duties as pertain by law or regulation to the
office of Cashier, or as are imposed by these By-laws, or as may be delegated
to him from time to time by the Board of Directors, the Chairman of the Board
or the President.
Section 5. Auditor. The Auditor shall be the chief auditing officer of the
Association. He shall continuously examine the affairs of the Association and
from time to time shall report to the Board of Directors. He shall have such
powers and perform such duties as are conferred upon, or assigned to him by
these By-laws, or as may be delegated to him from time to time by the Board
of Directors.
Section 6. Officers Seriatim. The Board of Directors shall designate from
time to time not less than two officers who shall in the absence or disability
of the Chairman or President or both, succeed seriatim to the duties and
responsibilities of the Chairman and President respectively.
Section 7. Clerks and Agents. The Board of Directors may appoint, from time
to time, such clerks, agents and employees as it may deem advisable for the
prompt and orderly transaction of the business of the Association, define
their duties, fix the salaries to be paid them and dismiss them. Subject to
the authority of the Board of Directors, the Chairman of the Board or the
President, or any other officer of the Association authorized by either of them
may appoint and dismiss all or any clerks, agents and employees and prescribe
their duties and the conditions of their employment, and from time to time
fix their compensation.
Section 8. Tenure. The Chairman of the Board of Directors and the President
shall, except in the case of death, resignation, retirement or disqualification
under these By-laws, or unless removed by the affirmative vote of at least two-
thirds of all of the members of the Board of Directors, hold office for the
term of one year or until their respective successors are appointed. Either
of such officers appointed to fill a vacancy occurring in an unexpired term
shall serve for such unexpired term of such vacancy. All other officers,
clerks, agents, attorneys-in-fact and employees of the Association shall hold
office during the pleasure of the Board of Directors or of the officer or
committee appointing them respectively.
ARTICLE VI
TRUST DEPARTMENT
Section 1. General Powers and Duties. All fiduciary powers of the Association
shall be exercised through the Trust Department, subject to such regulations as
the Comptroller of the Currency shall from time to time establish. The Trust
Department shall be to placed under the management and immediate supervision
of an officer or officers appointed by the Board of Directors. The duties of
all officers of the Trust Department shall be to cause the policies and
instructions of the Board and the Risk Management Committee with respect to the
trusts under their supervision to be carried out, and to supervise the due
performance of the trusts and agencies entrusted to the Association and under
their supervision, in accordance with law and in accordance with the terms of
such trusts and agencies.
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<PAGE> 16
ARTICLE VII
BRANCH OFFICES
Section 1. Establishment. The Board of Directors shall have full power to
establish, to discontinue, or, from time to time, to change the location of any
branch office, subject to such limitations as may be provided by law.
Section 2. Supervision and Control. Subject to the general supervision and
control of the Board of Directors, the affairs of branch offices shall be
under the immediate supervision and control of the President or of such other
officer or officers, employee or employees, or other individuals as the Board
of Directors may from time to time determine, with such powers and duties as
the Board of Directors may confer upon or assign to him or them.
ARTICLE VIII
SIGNATURE POWERS
Section 1. Authorization. The power of officers, employees, agents and
attorneys to sign on behalf of and to affix the seal of the Association shall
be prescribed by the Board of Directors or by the Executive Committee or by
both; provided that the President is authorized to restrict such power of any
officer, employee, agent or attorney to the business of a specific department
or departments, or to a specific branch office or branch offices. Facsimile
signatures may be authorized.
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<PAGE> 17
ARTICLE IX
STOCK CERTIFICATES AND TRANSFERS
Section 1. Stock Records. The Trust Department shall have custody of the
stock certificate books and stock ledgers of the Association, and shall make
all transfers of stock, issue certificates thereof and disburse dividends
declared thereon.
Section 2. Form of Certificate. Every shareholder shall be entitled to a
certificate conforming to the requirements of law and otherwise in such form
as the Board of Directors may approve. The certificates shall state on the
face thereof that the stock is transferable only on the books of the
Association and shall be signed by such officers as may be prescribed from time
to time by the Board of Directors or Executive Committee. Facsimile signatures
may be authorized.
Section 3. Transfers of Stock. Transfers of stock shall be made only on the
books of the Association by the holder in person, or by attorney duly
authorized in writing, upon surrender of the certificate therefor properly
endorsed, or upon the surrender of such certificate accompanied by a properly
executed written assignment of the same, or a written power of attorney to
sell, assign or transfer the same or the shares represented thereby.
Section 4. Lost Certificate. The Board of Directors or Executive Committee
may order a new certificate to be issued in place of a certificate lost or
destroyed, upon proof of such loss or destruction and upon tender to the
Association by the shareholder, of a bond in such amount and with or without
surety, as may be ordered, indemnifying the Association against all liability,
loss, cost and damage by reason of such loss or destruction and the issuance
of a new certificate.
Section 5. Closing Transfer Books. The Board of Directors may close the
transfer books for a period not exceeding thirty days preceding any regular
or special meeting of the shareholders, or the day designated for the payment
of a dividend or the allotment of rights. In lieu of closing the transfer
books the Board of Directors may fix a day and hour not more than thirty days
prior to the day of holding any meeting of the shareholders, or the day
designated for the payment of a dividend, or the day designated for the
allotment of rights, or the day when any change of conversion or exchange of
capital stock is to go into effect, as the day as of which shareholders
entitled to notice of and to vote at such meetings or entitled to such dividend
or to such allotment of rights or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, shall be determined, and
only such shareholders as shall be shareholders of record on the day and hour
so fixed shall be entitled to notice of and to vote at such meeting or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be.
ARTICLE X
THE CORPORATE SEAL
Section 1. Seal. The following is an impression of the seal of the
Association adopted by the Board of Directors.
ARTICLE XI
BUSINESS HOURS
Section 1. Business Hours. The main office of this Association and each
branch office thereof shall be open for business on such days, and for such
hours as the Chairman, or the President, or any Executive Vice President, or
such other officer as the Board of Directors shall from time to time
designate, may determine as to each office to conform to local custom and
convenience, provided that any one or more of the main and branch offices or
certain departments thereof may be open for such hours as the President, or
such other officer as the Board of Directors shall from time to time designate,
may determine as to each office or department on any legal holiday on which
work is not prohibited by law, and provided further that any one or more of
the main and branch offices or certain departments thereof may be ordered
closed or open on any day for such hours as to each office or department as
the President, or such other officer as the Board of Directors shall from time
to time designate, subject to applicable laws regulations, may determine when
such action may be required by reason of disaster or other emergency condition.
ARTICLE IX
CHANGES IN BY-LAWS
Section 1. Amendments. These By-laws may be amended upon vote of a majority
of the entire Board of Directors at any meeting of the Board, provided ten (10)
day's notice of the proposed amendment has been given to each member of the
Board of Directors. No amendment may be made unless the By-law, as amended, is
consistent with the requirements of law and of the Articles of Association.
These By-laws may also be amended by the Association's shareholders.
-9-
<PAGE> 18
EXHIBIT 5
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under the Indenture to be entered into between
America West Airlines, Inc. and Fleet National Bank, as Trustee,
does hereby consent that, pursuant to Section 321(b) of the Trust Indenture
Act of 1939, reports of examinations with respect to the undersigned by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
FLEET NATIONAL BANK,
AS TRUSTEE
By /s/ Mark A. Forgetta
-------------------------------
Mark A. Forgetta
Its: Vice President
Dated: November , 1996
<PAGE> 19
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Council
- --------------------------------------------------------------------------------
[FEDERAL FINANCIAL Please refer to page i, [1]
INSTITUTIONS EXAMINATION Table of Contents, for
COUNCIL LOGO] the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
(960630)
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 -----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks);
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Giro S. DeRosa, Vice President
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and
Income (including the supporting schedules) have been prepared in conformance
with the instructions issued by the appropriate Federal regulatory authority
and are true to the best of my knowledge and belief.
/s/ Giro DeRosa
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
July 25, 1996
- --------------------------------------------------------------------------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
/s/
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Banks: Return the original and one copy to the appropriate Federal
Reserve District Bank.
State Nonmember Banks: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
National Banks: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | Banks should affix
--------------------- the address label
(RCRI 90150) in this space.
CALL NO. 196 31 06-30-96
STAR: 25-0590 00327 STCERT: 25-02490
FLEET NATIONAL BANK
ONE MONARCH PLACE
SPRINGFIELD, MA 01102
Board of Governors of the Federal Reserve System, Federal Deposit
Insurance Corporation, Office of the Comptroller of the Currency
<PAGE> 20
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
___ ___
FDIC Certificate Number | 0 | 2 | 4 | 9 | 9 | | Banks should affix the address label in this space. |
______________________
(RCRI 9050) CALL NO. 196 31 06-30-96
STBK: 25-0590 00327 STCERT: 25-02499
FLEET NATIONAL BANK
ONE MONARCH PLACE
SPRINGFIELD, MA 01102
|___ ___|
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 21
FFIEC 031
Page i
/2/
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
________________________________________________________________________________
TABLE OF CONTENTS
SIGNATURE PAGE Cover
REPORT OF INCOME
Schedule RI--Income Statement...........................................RI-1,2,3
Schedule RI-A--Changes in Equity Capital....................................RI-4
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses..................................................................RI-4,5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority..........................................................RI-5
Schedule RI-D--Income from
International Operations..................................................RI-6
Schedule RI-E--Explanations...............................................RI-7,8
REPORT OF CONDITION
Schedule RC--Balance Sheet................................................RC-1,2
Schedule RC-A--Cash and Balances Due
From Depository Institutions..............................................RC-3
Schedule RC-B--Securities...............................................RC-3,4,5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases..............................................RC-6,7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).....................................................RC-7a,7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)..................................RC-8
Schedule RC-E--Deposit Liabilities....................................RC-9,10,11
Schedule RC-F--Other Assets................................................RC-11
Schedule RC-G--Other Liabilities...........................................RC-11
Schedule RC-H--Selected Balance Sheet Items for
Domestic Offices.........................................................RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBFs..................................................................RC-13
Schedule RC-K--Quarterly Averages..........................................RC-13
Schedule RC-L--Off-Balance Sheet Items...............................RC-14,15,16
Schedule RC-M--Memoranda................................................RC-17,18
Schedule RC-N--Past Due and Nonaccrual Loans,
Leases, and Other Assets..............................................RC-19,20
Schedule RC-O--Other Data for Deposit
Insurance Assessments.................................................RC-21,22
Schedule RC-R--Regulatory Capital.......................................RC-23,24
Optional Narrative Statement Concerning the
Amounts Reported in the Reports of
Condition and Income.....................................................RC-25
Special Report (TO BE COMPLETED BY ALL BANKS)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
DISCLOSURE OF ESTIMATED BURDEN
The estimated average burden associated with this information collection is
32.2 hours per respondent and is estimated to vary from 15 to 230 hours per
response, depending on individual circumstances. Burden estimates include the
time for reviewing instructions, gathering and maintaining data in the required
form, and completing the information collection, but exclude the time for
compiling and maintaining business records in the normal course of a
respondent's activities. Comments concerning the accuracy of this burden
estimate and suggestions for reducing this burden should be directed to the
Office of Information and Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington,
D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE> 22
<TABLE>
<CAPTION>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-1
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
Consolidated Report of Income
for the period January 1, 1996 - June 30, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
Schedule RI--Income Statement _________
| I480 |
______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________|_____________________|
<S> <C> <C>
1. Interest income: | ////////////////// |
a. Interest and fee income on loans: | ////////////////// |
(1) In domestic offices: | ////////////////// |
(a) Loans secured by real estate .................................................. | 4011 616,395 | 1.a.(1)(a)
(b) Loans to depository institutions .............................................. | 4019 588 | 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers ........... | 4024 286 | 1.a.(1)(c)
(d) Commercial and industrial loans ............................................... | 4012 562,807 | 1.a.(1)(d)
(e) Acceptances of other banks .................................................... | 4026 261 | 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: | ////////////////// |
(1) Credit cards and related plans ............................................ | 4054 9,643 | 1.a.(1)(f)(1)
(2) Other ..................................................................... | 4055 97,346 | 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions ........................ | 4056 0 | 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political | ////////////////// |
subdivisions in the U.S.: | ////////////////// |
(1) Taxable obligations ....................................................... | 4503 0 | 1.a.(1)(h)(1)
(2) Tax-exempt obligations .................................................... | 4504 5,232 | 1.a.(1)(h)(2)
(i) All other loans in domestic offices ........................................... | 4058 84,576 | 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4059 1,981 | 1.a.(2)
b. Income from lease financing receivables: | ////////////////// |
(1) Taxable leases .................................................................... | 4505 75,341 | 1.b.(1)
(2) Tax-exempt leases ................................................................. | 4307 791 | 1.b.(2)
c. Interest income on balances due from depository institutions:(1) | ////////////////// |
(1) In domestic offices ............................................................... | 4105 914 | 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 4106 142 | 1.c.(2)
d. Interest and dividend income on securities: | ////////////////// |
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations ... | 4027 209,142 | 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: | ////////////////// |
(a) Taxable securities ............................................................ | 4506 0 | 1.d.(2)(a)
(b) Tax-exempt securities ......................................................... | 4507 2,953 | 1.d.(2)(b)
(3) Other domestic debt securities .................................................... | 3657 12,164 | 1.d.(3)
(4) Foreign debt securities ........................................................... | 3658 3,348 | 1.d.(4)
(5) Equity securities (including investments in mutual funds) ......................... | 3659 10,212 | 1.d.(5)
e. Interest income from trading assets.................................................... | 4069 360 | 1.e.
______________________
</TABLE>
____________
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE> 23
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
Dollar Amounts in Thousands | Year-to-date |
___________________________________________________________________________________ ______________
<S> <C> <C>
1. Interest income (continued) | RIAD Bil Mil Thou |
f. Interest income on federal funds sold and securities purchased | ////////////////// |
under agreements to resell in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4020 24,925 | 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ | 4107 1,719,407 | 1.g.
2. Interest expense: | ////////////////// |
a. Interest on deposits: | ////////////////// |
(1) Interest on deposits in domestic offices: | ////////////////// |
(a) Transaction accounts (NOW accounts, ATS accounts, and | ////////////////// |
telephone and preauthorized transfer accounts) .............. | 4508 8,583 | 2.a.(1)(a)
(b) Nontransaction accounts: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................... | 4509 133,915 | 2.a.(1)(b)(1)
(2) Other savings deposits .................................. | 4511 26,678 | 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ | 4174 88,690 | 2.a.(1)(b)(3)
(4) All other time deposits ................................. | 4512 214,225 | 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement | ////////////////// |
subsidiaries, and IBFs .......................................... | 4172 50,022 | 2.a.(2)
b. Expense of federal funds purchased and securities sold under | ////////////////// |
agreements to repurchase in domestic offices of the bank and of | ////////////////// |
its Edge and Agreement subsidiaries, and in IBFs .................... | 4180 152,094 | 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading | ////////////////// |
liabilities, and other borrowed money ............................... | 4185 121,525 | 2.c.
d. Interest on mortgage indebtedness and obligations under | ////////////////// |
capitalized leases .................................................. | 4072 361 | 2.d.
e. Interest on subordinated notes and debentures ....................... | 4200 26,110 | 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... | 4073 822,203 | 2.f.
___________________________
3. Net interest income (item 1.g minus 2.f) ............................... | ////////////////// | RIAD 4074 | 897,204 | 3.
___________________________
4. Provisions: | ////////////////// |
___________________________
a. Provision for loan and lease losses ................................. | ////////////////// | RIAD 4230 | 21,672 | 4.a.
b. Provision for allocated transfer risk ............................... | ////////////////// | RIAD 4243 | 0 | 4.b.
___________________________
5. Noninterest income: | ////////////////// |
a. Income from fiduciary activities .................................... | 4070 144,614 | 5.a.
b. Service charges on deposit accounts in domestic offices ............. | 4080 111,736 | 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum | ////////////////// |
items 8.a through 8.d)............................................... A220 10,646 5.c.
d. Other foreign transaction gains (losses) ............................ | 4076 247 | 5.d.
e. Not applicable | ////////////////// |
f. Other noninterest income: | ////////////////// |
(1) Other fee income ................................................ | 5407 372,950 | 5.f.(1)
(2) All other noninterest income* ................................... | 5408 211,593 | 5.f.(2)
___________________________
g. Total noninterest income (sum of items 5.a through 5.f) ............. | ////////////////// | RIAD 4079 | 851,786 | 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. | ////////////////// | RIAD 3521 | 1 | 6.a.
b. Realized gains (losses) on available-for-sale securities ............ | ////////////////// | RIAD 3196 | 16,126 | 6.b.
___________________________
7. Noninterest expense: | ////////////////// |
a. Salaries and employee benefits ...................................... | 4135 322,146 | 7.a.
b. Expenses of premises and fixed assets (net of rental income) | ////////////////// |
(excluding salaries and employee benefits and mortgage interest) .... | 4217 114,912 | 7.b.
c. Other noninterest expense* .......................................... | 4092 631,554 | 7.c.
___________________________
d. Total noninterest expense (sum of items 7.a through 7.c) ............ | ////////////////// | RIAD 4093 | 1,068,612 | 7.d.
___________________________
8. Income (loss) before income taxes and extraordinary items and other | ////////////////// |
___________________________
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)| ////////////////// | RIAD 4301 | 674,833 | 8.
9. Applicable income taxes (on item 8) .................................... | ////////////////// | RIAD 4302 | 280,303 | 9.
___________________________
10. Income (loss) before extraordinary items and other adjustments | ////////////////// |
___________________________
(item 8 minus 9) ....................................................... | ////////////////// | RIAD 4300 | 394,530 | 10.
_________________________________________________
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
4
<PAGE> 24
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________ ______________
<S> <C> <C>
11. Extraordinary items and other adjustments: | ////////////////// |
a. Extraordinary items and other adjustments, gross of income taxes* . | 4310 0 | 11.a.
b. Applicable income taxes (on item 11.a)* ........................... | 4315 0 | 11.b.
c. Extraordinary items and other adjustments, net of income taxes | ////////////////// |__________________________
(item 11.a minus 11.b) ............................................ | ////////////////// | RIAD 4320 | 0 | 11.c.
12. Net income (loss) (sum of items 10 and 11.c) ......................... | ////////////////// | RIAD 4340 | 394,530 | 12.
_________________________________________________
</TABLE>
<TABLE>
<CAPTION>
__________
| I481 |
_______________
Memoranda | Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after | ////////////////// |
August 7, 1986, that is not deductible for federal income tax purposes .......................... | 4513 1,798 | M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices | ////////////////// |
(included in Schedule RI, item 8) ............................................................... | 8431 20,910 | M.2.
3.-4. Not applicable | ////////////////// |
5. Number of full-time equivalent employees on payroll at end of current period (round to | //// Number |
nearest whole number) ........................................................................... | 4150 9,852 | M.5.
6. Not applicable | ////////////////// |
7. If the reporting bank has restated its balance sheet as a result of applying push down | //// MM DD YY |
accounting this calendar year, report the date of the bank's acquisition ........................ | 9106 00/00/00 | M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) | ////////////////// |
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): | //// Bil Mil Thou |
a. Interest rate exposures ...................................................................... | 8757 1,428 | M.8.a.
b. Foreign exchange exposures ................................................................... | 8758 9,218 | M.8.b.
c. Equity security and index exposures .......................................................... | 8759 0 | M.8.c.
d. Commodity and other exposures ................................................................ | 8760 0 | M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: | ////////////////// |
a. Net increase (decrease) to interest income.....................................................| 8761 (5,575)| M.9.a.
b. Net (increase) decrease to interest expense ...................................................| 8762 (5,752)| M.9.b.
c. Other (noninterest) allocations ...............................................................| 8763 (172)| M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions).................................| A251 0 | M.10.
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
5
<PAGE> 25
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses. _________
| I483 |
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition | ////////////////// |
and Income ...................................................................................... | 3215 1,342,473 | 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................. | 3216 0 | 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ............................ | 3217 1,342,473 | 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................. | 4340 394,530 | 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net .............................. | 4346 0 | 5.
6. Changes incident to business combinations, net .................................................. | 4356 4,161,079 | 6.
7. LESS: Cash dividends declared on preferred stock ................................................ | 4470 0 | 7.
8. LESS: Cash dividends declared on common stock ................................................... | 4460 490,634 | 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions | ////////////////// |
for this schedule) .............................................................................. | 4411 0 | 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) | 4412 0 | 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ................ | 8433 (46,607)| 11.
12. Foreign currency translation adjustments ........................................................ | 4414 0 | 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ........ | 4415 (1,003,722)| 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, | ////////////////// |
item 28) ........................................................................................ | 3210 4,357,119 | 14.
______________________
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
<TABLE>
<CAPTION>
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
__________
| I486 |
__________________________________________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4651 35,701 | 4661 8,412 | 1.a.
b. To non-U.S. addressees (domicile) ..................................... | 4652 0 | 4662 0 | 1.b.
2. Loans to depository institutions and acceptances of other banks: | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository institutions .................. | 4653 0 | 4663 0 | 2.a.
b. To foreign banks ...................................................... | 4654 0 | 4664 0 | 2.b.
3. Loans to finance agricultural production and other loans to farmers ...... | 4655 2 | 4665 22 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ......................................... | 4645 38,139 | 4617 19,005 | 4.a.
b. To non-U.S. addressees (domicile) ..................................... | 4646 0 | 4618 102 | 4.b.
5. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures: | ////////////////// | ////////////////// |
a. Credit cards and related plans ........................................ | 4656 1,137 | 4666 733 | 5.a.
b. Other (includes single payment, installment, and all student loans) ... | 4657 7,864 | 4667 2,681 | 5.b.
6. Loans to foreign governments and official institutions ................... | 4643 0 | 4627 0 | 6.
7. All other loans .......................................................... | 4644 826 | 4628 541 | 7.
8. Lease financing receivables: | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ......................................... | 4658 3,729 | 4668 3,241 | 8.a.
b. Of non-U.S. addressees (domicile) ..................................... | 4659 0 | 4669 0 | 8.b.
9. Total (sum of items 1 through 8) ......................................... | 4635 87,398 | 4605 34,737 | 9.
___________________________________________
</TABLE>
6
<PAGE> 26
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RI-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-B--Continued
Part I. Continued
Memoranda
__________________________________________
| (Column A) | (Column B) |
| Charge-offs | Recoveries |
____________________ ____________________
| Calendar year-to-date |
_________________________________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou | RIAD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1-3. Not applicable | ////////////////// | ////////////////// |
4. Loans to finance commercial real estate, construction, and land | ////////////////// | ////////////////// |
development activities (not secured by real estate) included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, items 4 and 7, above .............................. | 5409 383 | 5410 1,374 | M.4.
5. Loans secured by real estate in domestic offices (included in | ////////////////// | ////////////////// |
Schedule RI-B, part I, item 1, above): | ////////////////// | ////////////////// |
a. Construction and land development ..................................... | 3582 189 | 3583 253 | M.5.a.
b. Secured by farmland ................................................... | 3584 145 | 3585 131 | M.5.b.
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ..................... | 5411 2,650 | 5412 108 | M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties ...... | 5413 13,892 | 5414 1,231 | M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ............. | 3588 837 | 3589 395 | M.5.d.
e. Secured by nonfarm nonresidential properties .......................... | 3590 17,988 | 3591 6,294 | M.5.e.
|_________________________________________|
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
_____________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.......... | 3124 266,943 | 1.
2. Recoveries (must equal part I, item 9, column B above) ........................................ | 4605 34,737 | 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above) ................................. | 4635 87,398 | 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)......................... | 4230 21,672 | 4.
5. Adjustments* (see instructions for this schedule) ................................ ............ | 4815 636,497 | 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, | ////////////////// |
item 4.b) ..................................................................................... | 3123 872,451 | 6.
|____________________|
</TABLE>
____________
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
| I489 | <-
____________ ________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Federal ....................................................................................... | 4780 N/A | 1.
2. State and local................................................................................ | 4790 N/A | 2.
3. Foreign ....................................................................................... | 4795 N/A | 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............ | 4770 N/A | 4.
____________________________| |
5. Deferred portion of item 4 ........................................ | RIAD 4772 | N/A | ////////////////// | 5.
__________________________________________________
</TABLE>
7
<PAGE> 27
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-6
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-D--Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations
account for more than 10 percent of total revenues, total assets, or net income.
Part I. Estimated Income from International Operations
__________
| I492 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, | ////////////////// |
and IBFs: | ////////////////// |
a. Interest income booked ................................................................... | 4837 N/A | 1.a.
b. Interest expense booked .................................................................. | 4838 N/A | 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs | ////////////////// |
(item 1.a minus 1.b) ..................................................................... | 4839 N/A | 1.c.
2. Adjustments for booking location of international operations: | ////////////////// |
a. Net interest income attributable to international operations booked at domestic offices .. | 4840 N/A | 2.a.
b. Net interest income attributable to domestic business booked at foreign offices .......... | 4841 N/A | 2.b.
c. Net booking location adjustment (item 2.a minus 2.b) ..................................... | 4842 N/A | 2.c.
3. Noninterest income and expense attributable to international operations: | ////////////////// |
a. Noninterest income attributable to international operations .............................. | 4097 N/A | 3.a.
b. Provision for loan and lease losses attributable to international operations ............. | 4235 N/A | 3.b.
c. Other noninterest expense attributable to international operations ....................... | 4239 N/A | 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a | ////////////////// |
minus 3.b and 3.c) ....................................................................... | 4843 N/A | 3.d.
4. Estimated pretax income attributable to international operations before capital allocation | ////////////////// |
adjustment (sum of items 1.c, 2.c, and 3.d) ................................................. | 4844 N/A | 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect | ////////////////// |
the effects of equity capital on overall bank funding costs ................................. | 4845 N/A | 5.
6. Estimated pretax income attributable to international operations after capital allocation | ////////////////// |
adjustment (sum of items 4 and 5) ........................................................... | 4846 N/A | 6.
7. Income taxes attributable to income from international operations as estimated in item 6 .... | 4797 N/A | 7.
8. Estimated net income attributable to international operations (item 6 minus 7) .............. | 4341 N/A | 8.
______________________
<CAPTION>
Memoranda ______________________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Intracompany interest income included in item 1.a above ..................................... | 4847 N/A | M.1.
2. Intracompany interest expense included in item 1.b above .................................... | 4848 N/A | M.2.
______________________
</TABLE>
<TABLE>
<CAPTION>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Interest income booked at IBFs .............................................................. | 4849 N/A | 1.
2. Interest expense booked at IBFs ............................................................. | 4850 N/A | 2.
3. Noninterest income attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs): | ////////////////// |
a. Gains (losses) and extraordinary items ................................................... | 5491 N/A | 3.a.
b. Fees and other noninterest income ........................................................ | 5492 N/A | 3.b.
4. Provision for loan and lease losses attributable to international operations booked at | ////////////////// |
domestic offices (excluding IBFs) ........................................................... | 4852 N/A | 4.
5. Other noninterest expense attributable to international operations booked at domestic offices | ////////////////// |
(excluding IBFs) ............................................................................ | 4853 N/A | 5.
______________________
</TABLE>
8
<PAGE> 28
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-7
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all
significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
__________
| I495 | <-
______ ________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): | ////////////////// |
a. Net gains on other real estate owned ..................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans .............................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets .......................................... | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 5.f.(2): | ////////////////// |
_____________
d. | TEXT 4461 | Income on Mortgages Held for Resale | 4461 81,194 | 1.d.
e. | TEXT 4462 | Gain From Branch Divestitures | 4462 77,976 | 1.e.
___________
f. | TEXT 4463 |______________________________________________________________________________| 4463 | 1.f.
_____________
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets ................................................ | 4531 135,939 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned .................................................... | 5418 0 | 2.b.
c. Net losses on sales of loans ............................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets ......................................... | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of | ////////////////// |
Schedule RI, item 7.c: | ////////////////// |
_____________
e. | TEXT 4464 | Intercompany Corporate Support Function Charges | 4464 143,184 | 2.e.
___________
f. | TEXT 4467 | Intercompany Data Processing & Programming Charges | 4467 158,034 | 2.f.
___________
g. | TEXT 4468 |______________________________________________________________________________| 4468 | 2.g.
_____________
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and | ////////////////// |
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe | ////////////////// |
all extraordinary items and other adjustments): | ////////////////// |
_____________
a. (1) | TEXT 4469 |__________________________________________________________________________| 4469 | 3.a.(1)
_____________
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a.(2)
_____________ ____________________________
b. (1) | TEXT 4487 |__________________________________________________________________________| 4487 | 3.b.(1)
_____________
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b.(2)
_____________ ____________________________
c. (1) | TEXT 4489 |__________________________________________________________________________| 4489 | 3.c.(1)
_____________
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c.(2)
____________________________
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, | ////////////////// |
item 2) (itemize and describe all adjustments): | ////////////////// |
_____________
a. | TEXT 4492 |______________________________________________________________________________| 4492 | 4.a.
___________
b. | TEXT 4493 |______________________________________________________________________________| 4493 | 4.b.
_____________
5. Cumulative effect of changes in accounting principles from prior years (from | ////////////////// |
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
_____________
a. | TEXT 4494 |______________________________________________________________________________| 4494 | 5.a.
___________
b. | TEXT 4495 |______________________________________________________________________________| 4495 | 5.b.
_____________
6. Corrections of material accounting errors from prior years (from Schedule RI-A, | ////////////////// |
item 10) (itemize and describe all corrections): | ////////////////// |
_____________
a. | TEXT 4496 | 4496 | 6.a.
___________|______________________________________________________________________________
b. | TEXT 4497 4497 | 6.b.
____________|____________________________________________________________________________________________________
</TABLE>
9
<PAGE> 29
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RI-8
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RI-E--Continued
________________
| Year-to-date |
______ ______________
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
_____________
a. | TEXT 4498 | Fleet National Bank Surplus Distribution to FFG | 4498 (1,003,722) | 7.a.
__________________________________________________________________________________________| |
b. | TEXT 4499 | | 4499 | 7.b.
___________________________________________________________________________________________
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, | ////////////////// |
item 5) (itemize and describe all adjustments): | ////////////////// |
_____________ | |
a. | TEXT 4521 | 12/31/95 Ending Balance of Pooled Entities | 4521 | 8.a.
___________________________________________________________________________________________| |
b. | TEXT 4522 | | 4522 | 8.b.
___________________________________________________________________________________________| |
____________________
9. Other explanations (the space below is provided for the bank to briefly describe, | I498 | I499 | <-
______________________
at its option, any other significant items affecting the Report of Income):
___
No comment |X| (RIAD 4769)
___
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE> 30
<TABLE>
<S> <C>
Legal Title of Bank: Fleet National Bank Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-1
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC--Balance Sheet
__________
| C400 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1) ................................... | 0081 4,130,928 | 1.a.
b. Interest-bearing balances(2) ............................................................ | 0071 46,521 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. | 1754 257,441 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ | 1773 7,250,067 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices | ////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold ...................................................................... | 0276 17,428 | 3.a.
b. Securities purchased under agreements to resell ......................................... | 0277 0 | 3.b.
4. Loans and lease financing receivables: ____________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) | RCFD 2122 | 31,278,251 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses ................... | RCFD 3123 | 872,451 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve ....................... | RCFD 3128 | 0 | ////////////////// | 4.c.
____________________________
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... | 2125 30,405,800 | 4.d.
5. Trading assets (from schedule RC-D )........................................................ | 3545 71,354 | 5.
6. Premises and fixed assets (including capitalized leases) ................................... | 2145 534,844 | 6.
7. Other real estate owned (from Schedule RC-M) ............................................... | 2150 34,546 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... | 2130 0 | 8.
9. Customers' liability to this bank on acceptances outstanding ............................... | 2155 16,634 | 9.
10. Intangible assets (from Schedule RC-M) ..................................................... | 2143 2,283,414 | 10.
11. Other assets (from Schedule RC-F) .......................................................... | 2160 3,978,638 | 11.
12. Total assets (sum of items 1 through 11) ................................................... | 2170 49,027,615 | 12.
______________________
</TABLE>
____________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE> 31
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-2
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC--Continued
___________________________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
<S> <C> <C>
LIABILITIES | /////////////////////// |
13. Deposits: | /////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, | /////////////////////// |
part I) ............................................................................... | RCON 2200 34,110,580 | 13.a.
____________________________
(1) Noninterest-bearing(1) ................................ | RCON 6631 10,202,036 | /////////////////////// | 13.a.(1)
(2) Interest-bearing ...................................... | RCON 6636 23,908,544 | /////////////////////// | 13.a.(2)
____________________________
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, | /////////////////////// |
part II) .............................................................................. | RCFN 2200 1,745,663 | 13.b.
____________________________
(1) Noninterest-bearing ................................... | RCFN 6631 400 | /////////////////////// | 13.b.(1)
(2) Interest-bearing ...................................... | RCFN 6636 1,745,263 | /////////////////////// | 13.b.(2)
____________________________
14. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | /////////////////////// |
a. Federal funds purchased ............................................................... | RCFD 0278 4,302,800 | 14.a.
b. Securities sold under agreements to repurchase ........................................ | RCFD 0279 566,036 | 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. | RCON 2840 14,411 | 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. | RCFD 3548 57,446 | 15.b.
16. Other borrowed money: | /////////////////////// |
a. With a remaining maturity of one year or less.......................................... | RCFD 2332 487,435 | 16.a.
b. With a remaining maturity of more than one year........................................ | RCFD 2333 893,259 | 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... | RCFD 2910 11,561 | 17.
18. Bank's liability on acceptances executed and outstanding ................................. | RCFD 2920 16,634 | 18.
19. Subordinated notes and debentures ........................................................ | RCFD 3200 1,213,219 | 19.
20. Other liabilities (from Schedule RC-G) ................................................... | RCFD 2930 1,251,452 | 20.
21. Total liabilities (sum of items 13 through 20) ........................................... | RCFD 2948 44,670,496 | 21.
| /////////////////////// |
22. Limited-life preferred stock and related surplus ......................................... | RCFD 3282 0 | 22.
EQUITY CAPITAL | /////////////////////// |
23. Perpetual preferred stock and related surplus ............................................ | RCFD 3838 125,000 | 23.
24. Common stock ............................................................................. | RCFD 3230 19,487 | 24.
25. Surplus (exclude all surplus related to preferred stock).................................. | RCFD 3839 2,551,927 | 25.
26. a. Undivided profits and capital reserves ................................................ | RCFD 3632 1,693,408 | 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ | RCFD 8434 (32,703)| 26.b.
27. Cumulative foreign currency translation adjustments ...................................... | RCFD 3284 0 | 27.
28. Total equity capital (sum of items 23 through 27) ........................................ | RCFD 3210 4,357,119 | 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, | /////////////////////// |
and 28) .................................................................................. | RCFD 3300 49,027,615 | 29.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the Number
most comprehensive level of auditing work performed for the bank by independent external __________________
auditors as of any date during 1995 ............................................................... | RCFD 6724 N/A | M.1.
__________________
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
____________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
12
<PAGE> 32
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-3
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
__________
| C405 | <-
_________________________________ ________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | ////////////////// | ////////////////// |
coin .................................................................... | 0022 3,402,522 | ////////////////// | 1.
a. Cash items in process of collection and unposted debits .............. | ////////////////// | 0020 2,655,163 | 1.a.
b. Currency and coin .................................................... | ////////////////// | 0080 747,539 | 1.b.
2. Balances due from depository institutions in the U.S. ................... | ////////////////// | 0082 500,301 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs) ... | 0083 0 | ////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | ////////////////// | ////////////////// |
in the U.S. (including their IBFs) ................................... | 0085 500,373 | ////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks .. | ////////////////// | 0070 7,902 | 3.
a. Foreign branches of other U.S. banks ................................. | 0073 690 | ////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks ........... | 0074 7,948 | ////////////////// | 3.b.
4. Balances due from Federal Reserve Banks ................................. | 0090 265,916 | 0090 0 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | ////////////////// | ////////////////// |
Schedule RC, sum of items 1.a and 1.b) .................................. | 0010 4,177,449 | 0010 4,176,641 | 5.
___________________________________________
<CAPTION>
______________________
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | ////////////////// |
column B above) .............................................................................. | 0050 453,780 | M.1.
______________________
</TABLE>
Schedule RC-B--Securities
Exclude assets held for trading.
<TABLE>
<CAPTION>
_______
| C410 | <-
___________________________________________________________________________ ________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C> <C>
1. U.S. Treasury securities ......... | 0211 250 | 0213 250 | 1286 1,274,624 | 1287 1,252,546 | 1.
2. U.S. Government agency | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
and corporation obligations | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
(exclude mortgage-backed | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
securities): | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Issued by U.S. Govern- | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
ment agencies(2) .............. | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
Government-sponsored | ////////////////// | ////////////////// | ////////////////// | ////////////////// |
agencies(3) ................... | 1294 0 | 1295 0 | 1297 498 | 1298 505 | 2.b.
_____________________________________________________________________________________
</TABLE>
_____________
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
13
<PAGE> 33
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-4
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
_____________________________________________________________________________________
| Held-to-maturity | Available-for-sale |
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value(1) |
____________________ ____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________________________ ____________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
3. Securities issued by states | ////////////////// |/ //////////////// | ////////////////// | ///////////////// |
and political subdivisions | ////////////////// |////////////////// | ////////////////// | ///////////////// |
in the U.S.: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. General obligations ......... | 1676 150,357 |1677 150,242 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations ......... | 1681 8,887 |1686 8,889 | 1690 0 | 1691 0 | 3.b.
c. Industrial development | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and similiar obligations .....| 1694 0 |1695 0 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Pass-through securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Guaranteed by | ////////////////// |////////////////// | ////////////////// | ///////////////// |
GNMA ....................... | 1698 0 |1699 0 | 1701 861,176 | 1702 852,929 | 4.a.(1)
(2) Issued by FNMA | ////////////////// |////////////////// | ////////////////// | ///////////////// |
and FHLMC ................. | 1703 908 |1705 908 | 1706 4,854,605 | 1707 4,831,023 | 4.a.(2)
(3) Other pass-through | ////////////////// |////////////////// | ///////////////////| ///////////////// |
secruities ................. | 1709 4 |1710 4 | 1711 0 | 1713 0 | 4.a.(3)
b. Other mortgage-backed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (include CMO's, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
REMICs, and stripped | ////////////////// |////////////////// | ////////////////// | ///////////////// |
MBS): | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(1) Issued or guaranteed | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by FNMA, FHLMC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
or GNMA ............... | 1714 0 |1715 0 | 1716 0 | 1717 0 | 4.b.(1)
(2) Collateralized | ////////////////// |////////////////// | ////////////////// | ///////////////// |
by MBS issued or | ////////////////// |////////////////// | ////////////////// | ///////////////// |
guaranteed by FNMA, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
FHLMC, or GNMA ........ | 1718 0 |1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | ////////////////// |////////////////// | ////////////////// | //////////////// |
backed securities ..... | 1733 0 |1734 0 | 1735 518 | 1736 518 | 4.b.(3)
5. Other debt securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Other domestic debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities.................. | 1737 0 |1738 0 | 1739 817 | 1741 812 | 5.a.
b. Foreign debt | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities ................. | 1742 97,035 |1743 78,878 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | ////////////////// |////////////////// | ////////////////// | ///////////////// |
a. Investments in mutual | ////////////////// |////////////////// | ////////////////// | ///////////////// |
funds ...................... | ////////////////// |////////////////// | 1747 0 | 1748 0 | 6.a.
b. Other equity securities | ////////////////// |////////////////// | ////////////////// | ///////////////// |
with readily determin- | ////////////////// |////////////////// | ////////////////// | ///////////////// |
able fair values ........... | ////////////////// |////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | ////////////////// |////////////////// | ////////////////// | ///////////////// |
securities (1) ............. | ////////////////// |////////////////// | 1752 311,734 | 1753 311,734 | 6.c.
7. Total (sum of items 1 | ////////////////// |////////////////// | ////////////////// | ///////////////// |
through 6) (total of | ////////////////// |////////////////// | ////////////////// | ///////////////// |
column A must equal | ////////////////// |////////////////// | ////////////////// | ///////////////// |
Schedule RC, item 2.a) | ////////////////// |////////////////// | ////////////////// | ///////////////// |
(total of column D must | ////////////////// |////////////////// | ////////////////// | ///////////////// |
equal Schedule RC, | ////////////////// |////////////////// | ////////////////// | ///////////////// |
item 2.b) ..................... | 1754 257,441 | 1771 239,171 | 1772 7,303,972 | 1773 7,250,067 | 7.
|__________________________________________________________________________________|
</TABLE>
____________
1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE> 34
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-5
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-B--Continued
<CAPTION>
___________
Memoranda | C412 | <-
___________ _________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Pledged securities(2) ......................................................................... | 0416 2,308,912 | M.1.
2. Maturity and repricing data for debt securities(2),(3),(4) (excluding those in | ////////////////// |
nonaccrual status): | ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | 0343 72,490 | M.2.a.(1)
(2) Over three months through 12 months .................................................... | 0344 77,125 | M.2.a.(2)
(3) Over one year through five years ....................................................... | 0345 2,734,577 | M.2.a.(3)
(4) Over five years ........................................................................ | 0346 2,925,207 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)) ..... | 0347 5,809,399 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | 4544 531,365 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | 4545 855,010 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years .................................................. | 4552 0 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4)) .. | 4553 1,386,375 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt | ////////////////// |
securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual | ////////////////// |
debt securities included in Schedule RC-N, item 9, column C) ............................... | 0393 7,195,774 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms (included | ////////////////// |
in Schedule RC-B, items 3 through 5, column A, above) ......................................... | 5365 0 | M.4.
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less(2),(4) (included in | ////////////////// |
Memorandum items 2.b(1) through 2.b.(4) above)................................................. | 5519 3,700 | M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or | ////////////////// |
trading securities during the calendar year-to-date (report the amortized cost at date of sale | ////////////////// |
or transfer ................................................................................... | 1778 0 | m.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost ............................................................................. | 8780 0 | M.8.a.
b. Fair Value ................................................................................. | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items 2, 3, and 5): | ////////////////// |
a. Amortized cost ............................................................................. | 8782 0 | M.9.a.
b. Fair Value ................................................................................. | 8783 0 | M.9.b.
----------------------
</TABLE>
____________
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
15
<PAGE> 35
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-6
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
_________
Do not deduct the allowance for loan and lease losses from amounts | C415 | <-
reported in this schedule. Report total loans and leases, net of unearned _________________________________|________|
income. Exclude assets held for trading. | (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Loans secured by real estate ........................................... | 1410 11,754,916 | ////////////////// | 1.
a. Construction and land development ................................... | ////////////////// | 1415 433,880 | 1.a.
b. Secured by farmland (including farm residential and other | ////////////////// | ////////////////// |
improvements) ....................................................... | ////////////////// | 1420 2,172 | 1.b
c. Secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | ////////////////// | ////////////////// |
properties and extended under lines of credit ................... | ////////////////// | 1797 2,022,596 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | ////////////////// | ////////////////// |
(a) Secured by first liens ...................................... | ////////////////// | 5367 4,418,239 | 1.c.(2)(a)
(b) Secured by junior liens ..................................... | ////////////////// | 5368 492,952 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties ........... | ////////////////// | 1460 559,373 | 1.d.
e. Secured by nonfarm nonresidential properties ........................ | ////////////////// | 1480 3,825,704 | 1.e.
2. Loans to depository institutions: | ////////////////// | ////////////////// |
a. To commercial banks in the U.S. ..................................... | ////////////////// | 1505 143,682 | 2.a.
(1) To U.S. branches and agencies of foreign banks .................. | 1506 0 | ////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ........................... | 1507 143,682 | ////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. ........................ | 1517 0 | 1517 12,345 | 2.b.
c. To banks in foreign countries ....................................... | ////////////////// | 1510 672 | 2.c.
(1) To foreign branches of other U.S. banks ......................... | 1513 149 | ////////////////// | 2.c.(1)
(2) To other banks in foreign countries ............................. | 1516 523 | ////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers .... | 1590 5,889 | 1590 5,889 | 3.
4. Commercial and industrial loans: | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ....................................... | 1763 12,446,547 | 1763 12,402,858 | 4.a.
b. To non-U.S. addressees (domicile) ................................... | 1764 83,521 | 1764 54,074 | 4.b.
5. Acceptances of other banks: | ////////////////// | ////////////////// |
a. Of U.S. banks ....................................................... | 1756 0 | 1756 0 | 5.a.
b. Of foreign banks .................................................... | 1757 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | ////////////////// | ////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper) ......... | ////////////////// | 1975 2,217,352 | 6.
a. Credit cards and related plans (includes check credit and other | ////////////////// | ////////////////// |
revolving credit plans) ............................................. | 2008 161,652 | ////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans).. | 2011 2,055,700 | ////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | ////////////////// | ////////////////// |
foreign central banks) ................................................. | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and political | ////////////////// | ////////////////// |
subdivisions in the U.S. (includes nonrated industrial development | ////////////////// | ////////////////// |
obligations) ........................................................... | 2107 167,100 | 2107 167,100 | 8.
9. Other loans ............................................................ | 1563 2,146,172 | ////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and unsecured).. | ////////////////// | 1545 156,275 | 9.a.
b. All other loans (exclude consumer loans) ............................ | ////////////////// | 1564 1,989,897 | 9.b.
10. Lease financing receivables (net of unearned income) ................... | ////////////////// | 2165 2,300,055 | 10.
a. Of U.S. addressees (domicile) ....................................... | 2182 2,300,055 | ////////////////// | 10.a.
b. Of non-U.S. addressees (domicile) ................................... | 2183 0 | ////////////////// | 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ........ | 2123 0 | 2123 0 | 11.
12. Total loans and leases, net of unearned income (sum of items 1 through | ////////////////// | ////////////////// |
10 minus item 11) (total of column A must equal Schedule RC, item 4.a).. | 2122 31,278,251 | 2122 31,205,115 | 12.
___________________________________________
</TABLE>
16
<PAGE> 36
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page: RC-7
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-C--Continued
Part I. Continued
___________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above .............. | 1496 0 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms | ////////////////// | ////////////////// |
(included in Schedule RC-C, part I, above and not reported as past due | ////////////////// | ////////////////// |
or nonaccrual in Schedule RC-N, Memorandum item 1): | ////////////////// | ////////////////// |
a. Loans secured by real estate: | ////////////////// | ////////////////// |
(1) To U.S. addressees (domicile) ................................... | 1687 511 | M.2.a.(1)
(2) To non-U.S. addressees (domicile) ............................... | 1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans | ////////////////// |
to individuals for household, family, and other personal expenditures)| 8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables | ////////////////// |
of non-U.S. addressees (domicile) included in Memorandum item 2.b | ////////////////// |
above ............................................................... | 8692 0 | M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those | ////////////////// |
in nonaccrual status): | ////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: | ////////////////// |
(1) Three months or less ............................................ | 0348 10,215,575 | M.3.a.(1)
(2) Over three months through 12 months ............................. | 0349 369,421 | M.3.a.(2)
(3) Over one year through five years ................................ | 0356 3,479,742 | M.3.a.(3)
(4) Over five years ................................................. | 0357 5,791,166 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of | ////////////////// |
Memorandum items 3.a.(1) through 3.a.(4)) ....................... | 0358 19,855,904 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently .................................... | 4554 8,960,876 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly . | 4555 1,848,295 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than | ////////////////// |
annually ........................................................ | 4561 250,031 | M.3.b.(3)
(4) Less frequently than every five years ........................... | 4564 12,721 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) | ////////////////// |
through 3.b.(4)) ................................................ | 4567 11,071,923 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) | ////////////////// |
(must equal the sum of total loans and leases, net, from | ////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from | ////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and | ////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C) ...... | 1479 30,927,827 | M.3.c.
d. FLOATING RATE LOANS WITH A REMAINING MATURITY OF ONE YEAR OR LESS | ////////////////// |
(INCLUDED IN MEMORANDUM ITEMS 3.b.(1) THROUGH 3.b.(4) ABOVE)......... | A246 1,543,411 | M.3.d.
4. Loans to finance commercial real estate, construction, and land | ////////////////// |
development activities (NOT SECURED BY REAL ESTATE) included in | ////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) ........... | 2746 271,706 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, | ////////////////// |
above .................................................................. | 5369 0 | M.5.
| ////////////////// |_____________________
6. Adjustable rate closed-end loans secured by first liens on 1-4 family | ////////////////// | RCON Bil Mil Thou |
residential properties (included in Schedule RC-C, part I, item | ////////////////// | ___________________|
1.c.(2)(a), column B, page RC-6) ....................................... | ////////////////// | 5370 1.655.898 | M.6.
|_________________________________________|
</TABLE>
_____________________________
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplememtal Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.
17
<PAGE> 37
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-7a
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<S> <C>
Schedule RC-C--Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business loans with "original amounts" of $1,000,000 or less
and farm loans with "original amounts" of $500,000 or less. The following guidelines should be used to determine the "original
amount" of a loan: (1) For loans drawn down under lines of credit or loan commitments, the "original amount" of the loan is the
size of the line of credit or loan commitment when the line of credit or loan commitment was most recently approved, extended, or
renewed prior to the report date. However, if the amount currently outstanding as of the report date exceeds this size, the
"original amount" is the amount currently outstanding on the report date. (2) For loan participations and syndications, the
"original amount" of the loan participation or syndication is the entire amount of the credit originated by the lead lender.
(3) For all other loans, the "original amount" is the total amount of the loan at origination or the amount currently
outstanding as of the report date, whichever is larger.
Loans to Small Businesses
</TABLE>
<TABLE>
<S> <C>
1. Indicate in the appropriate box at the right whether all or substantially all of the dollar volume of your
bank's "Loans secured by nonfarm nonresidential properties" in domestic offices reported in Schedule RC-C,
part I, item 1.e, column B, and all or substantially all of the dollar volume of your bank's
"Commercial and industrial loans to U.S. addressees" in domestic offices reported in Schedule RC-C, __________
part I, item 4.a, column B, have original amounts of $100,000 or less (If your bank has no loans ________| C415 | <-
outstanding in both of these two loan categories, place an "X" in the box marked "NO" and go to | RCON YES NO|
Item 5; otherwise, see instructions for further information.).................................. | 6999 | |///| x | 1.
___________________
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO and your bank has loans outstanding in either loan category, skip items 2.a and 2.b,
complete items 3 and 4 below, and go to item 5. _____________________
| Number of Loans |
2. Report the total number of loans currently outstanding for each of the |____________________|
following Schedule RC-C, part I, loan categories: | RCON |/////////// |
a. "Loans secured by nonfarm nonresidential properties" in domestic | ////////////////// |
offices reported in Schedule RC-C, part I, item 1.e, column B....... | 5562 N/A | 2.a.
b. "Commercial and industrial loans to U.S. addressees" in domestic | ////////////////// |
offices reported in Schedule RC-C, part I, item 4.a, column B ...... | 5563 N/A | 2.b.
______________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
____________________ ____________________
Dollar Amounts in Thousands | RCON | ///////////| RCON Bil Mil Thou |
_____________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
3. Number and amount currently outstanding of "Loans secured by nonfarm | /////////////////////////////////////// | 1.
nonresidential properties" in domestic offices reported in Schedule RC-C | /////////////////////////////////////// | 1.a.
part I item 1.e, column B (sum of items 3.a through 3.c must be less | /////////////////////////////////////// |
or equal to Schedule RC-C, part I, item 1.e, column B): | /////////////////////////////////////// | 1.b
a. With original amounts of $100,000 or less ........................... | 5564 1,988 | 5565 76,370 | 3.a.
b. With original amounts of more than $100,000 through $250,000 ........ | 5566 2,805 | 5567 332,639 | 3.b.
c. With original amounts of more than $250,000 through $1,000,000 ...... | 5568 2,736 | 5569 952,476 | 3.c.
4. Number and amount currently outstanding of "Commercial and industrial | /////////////////////////////////////// |
loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | /////////////////////////////////////// |
part I, item 4.a, column B (sum of items 4.a through 4.c must be less | /////////////////////////////////////// |
than or equal to Schedule RC-C, part I, item 4.a, column B): | /////////////////////////////////////// |
a. With original amounts of $100,000 or less ........................... | 5570 11,433 | 5571 337,759 | 4.a.
b. With original amounts of more than $100,000 through $250,000 ........ | 5572 2,127 | 5573 228,713 | 4.b.
c. With original amounts of more than $250,000 through $1,000,000 ...... | 5574 1,968 | 5575 601,126 | 4.c.
___________________________________________
</TABLE>
17a
<PAGE> 38
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-7b
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
Schedule RC-C -- Continued
Part II. Continued
Agricultural Loans to Small Farms
<TABLE>
<S> <C> <C>
5. Indicate in the appropriate box at the right whether all or substantially all of the
dollar volume of your bank's "Loans secured by farmland (including farm residential
and other improvements)" in domestic offices reported in Schedule RC-C, part I, item
1.b, column B, and all or substantially all of the dollar volume of your bank's
"Loans to finance agricultural production and other loans to farmers" in domestic
offices reported in Schedule RC-C, part I, item 3, column B, have original amounts
of $100,000 or less (If your bank has no loans outstanding in both of these two YES NO
loan categories, place an "X" in the box marked "NO" and do not complete items 7 _______________________
and 8; otherwise, see instructions for further information.)................................... | 6860 | | /// | X | 5.
|_____________________|
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items 6.a and 6.b
and complete items 7 and 8 below.
</TABLE>
<TABLE>
<S> <C>
______________________
| Number of Loans |
6. Report the total number of loans currently outstanding for each of the |____________________|
following Schedule RC-C, part I, loan categories: | RCON |//////////// |
a. "Loans secured by farmland (including farm residential and other |______| |
improvements)" in domestic offices reported in Schedule RC-C, part I, | ////////////////// |
item 1.b, column B........................................................ | 5576 N/A | 6.a.
b. "Loans to finance agricultural production and other loans to farmers" in | ////////////////// |
domestic offices reported in Schedule RC-C, part I, item 3, column B...... | 5577 N/A | 6.b.
|____________________|
</TABLE>
<TABLE>
<S> <C> <C>
_____________________________________________
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
|_____________________|______________________|
Dollar Amounts in Thousands | RCON |/////////////| RCON Bil Mil Thou |
________________________________________________________________________________| ______| |_____________________ |
7. Number and amount currently outstanding of "Loans secured by farmland | ////////////////////////////////////////// |
(including farm residential and other improvements)" in domestic offices | ////////////////////////////////////////// |
reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | ////////////////////////////////////////// |
through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | ////////////////////////////////////////// |
column B): | ////////////////////////////////////////// |
a. With original amounts of $100,000 or less............................... | 5578 18 | 5579 292 | 7.a.
b. With original amounts of more than $100,000 through $250,000............ | 5580 8 | 5581 850 | 7.b.
c. With original amounts of more than $250,000 through $500,000............ | 5582 4 | 5583 1,030 | 7.c.
8. Number and amount currently outstanding of "Loans to finance agricultural | ////////////////////////////////////////// |
production and other loans to farmers" in domestic offices reported in | ////////////////////////////////////////// |
Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | ////////////////////////////////////////// |
must be less than or equal to Schedule RC-C, part I, item 3, column B): | ////////////////////////////////////////// |
a. With original amounts of $100,000 or less............................... | 5584 46 | 5585 992 | 8.a.
b. With original amounts of more than $100,000 through $250,000............ | 5586 17 | 5587 1,877 | 8.b.
c. With original amounts of more than $250,000 through $500,000............ | 5588 4 | 5589 1,054 | 8.c.
|_____________________|______________________|
</TABLE>
17b
<PAGE> 39
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-8
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-D--Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional
amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
__________
| C420 |
__________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou|
__________________________________________________________________________________________________| ________________________|
<S> <C> <C>
ASSETS | /////////////////////// |
1. U.S. Treasury securities in domestic offices ................................................ | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage- | /////////////////////// |
backed securities) .......................................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices ...... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices: | /////////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA ..................... | RCON 3534 0 | 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA | /////////////////////// |
(include CMOs, REMICs, and stripped MBS) ................................................. | RCON 3535 0 | 4.b.
c. All other mortgage-backed securities ......................................................| RCON 3536 0 | 4.c.
5. Other debt securities in domestic offices ................................................... | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices ................................................. | RCON 3538 0 | 6.
7. Commercial paper in domestic offices ........................................................ | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices ..................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices .................................................... | RCON 3541 0 | 9.
10. Trading assets in foreign offices ........................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts: | /////////////////////// |
a. In domestic offices ...................................................................... | RCON 3543 66,696 | 11.a.
b. In foreign offices ....................................................................... | RCFN 3544 4,658 | 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) ........... | RCFD 3545 71,354 | 12.
<CAPTION>
___________________________
___________________________
| ///////// Bil Mil Thou |
LIABILITIES | ________________________|_
<S> <C> <C>
13. Liability for short positions ............................................................... | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity | /////////////////////// |
contracts ................................................................................... | RCFD 3547 57,446 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) ...... | RCFD 3548 57,446 | 15.
___________________________
</TABLE>
18
<PAGE> 40
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-9
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
__________
| C425 | <-
______________________________________________________ ________
| | Nontransaction |
| Transaction Accounts | Accounts |
_________________________________________ ____________________
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including| demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
Deposits of: | ////////////////// | ////////////////// | ////////////////// |
1. Individuals, partnerships, and corporations .......... | 2201 8,615,650 | 2240 8,158,203 | 2346 22,594,478 | 1.
2. U.S. Government ...................................... | 2202 58,650 | 2280 58,605 | 2520 42,512 | 2.
3. States and political subdivisions in the U.S. ........ | 2203 818,151 | 2290 706,072 | 2530 702,686 | 3.
4. Commercial banks in the U.S. ......................... | 2206 836,005 | 2310 836,005 | 2550 771 | 4.
5. Other depository institutions in the U.S. ............ | 2207 221,571 | 2312 221,571 | 2349 2,968 | 5.
6. Banks in foreign countries ........................... | 2213 18,445 | 2320 18,445 | 2236 0 | 6.
7. Foreign governments and official institutions | ////////////////// | ////////////////// | ////////////////// |
(including foreign central banks) .................... | 2216 108 | 2300 108 | 2377 0 | 7.
8. Certified and official checks ........................ | 2330 198,585 | 2330 198,585 | ////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | ////////////////// | ////////////////// | ////////////////// |
columns A and C must equal Schedule RC, | ////////////////// | ////////////////// | ////////////////// |
item 13.a) ........................................... | 2215 10,767,165 | 2210 10,197,594 | 2385 23,343,415 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCON Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | ////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ......................... | 6835 2,735,425 | M.1.a.
b. Total brokered deposits ..................................................................... | 2365 1,636,611 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | ////////////////// |
(1) Issued in denominations of less than $100,000 ........................................... | 2343 2,350 | M.1.c.(1)
(2) Issued EITHER in denominations of $100,000 OR in denominations greater than $100,000 | ////////////////// |
and participated out by the broker in shares of $100,000 or less ........................ | 2344 1,634,261 | M.1.c.(2)
d. MATURITY DATA FOR BROKERED DEPOSITS: | ////////////////// |
(1) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF LESS THAN $100,000 WITH A REMAINING | ////////////////// |
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.c.(1) ABOVE)................. | A243 171 | M.1.d.(1)
(2) BROKERED DEPOSITS ISSUED IN DENOMINATIONS OF $100,000 OR MORE WITH A REMAINING | ////////////////// |
MATURITY OF ONE YEAR OR LESS (INCLUDED IN MEMORANDUM ITEM 1.b ABOVE)..................... | A244 509,265 | M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | ////////////////// |
reported in item 3 above which are secured or collateralized as required under state law) ... | 5590 457,587 | M.1.e.
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d must | ////////////////// |
equal item 9, column C above): | ////////////////// |
a. Savings deposits: | ////////////////// |
(1) Money market deposit accounts (MMDAs) ................................................... | 6810 10,738,339 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs) ................................................. | 0352 2,655,659 | M.2.a.(2)
b. Total time deposits of less than $100,000 ................................................... | 6648 7,247,099 | M.2.b.
c. Time certificates of deposit of $100,000 or more ............................................ | 6645 2,702,318 | M.2.c.
d. Open-account time deposits of $100,000 or more .............................................. | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above) .................................................. | 2398 569,571 | M.3.
4. Not applicable
______________________
</TABLE>
19
<PAGE> 41
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-10
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
_________________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000 (sum of | ////////////////// |
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1) | ////////////////// |
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: | ////////////////// |
(1) Three months or less.................................................................... | A225 1,684,248 | M.5.a.(1)
(2) Over three months through 12 months..................................................... | A226 3,493,722 | M.5.a.(2)
(3) Over one year........................................................................... | A227 2,002,999 | M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently............................................................ | A228 66,130 | M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly......................... | A229 0 | M.5.b.(2)
(3) Less frequently than annually........................................................... | A230 0 | M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above)............... | A231 45,084 | M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates | ////////////////// |
of deposit of $100,000 or more and open-account time deposits of $100,000 or more) | ////////////////// |
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum | ////////////////// |
items 2.c and 2.d above):(1) | ////////////////// |
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: | ////////////////// |
(1) Three months or less ................................................................... | A232 534,657 | M.6.a.(1)
(2) Over three months through 12 months .................................................... | A233 754,429 | M.6.a.(2)
(3) Over one year through five years ....................................................... | A234 1,282,541 | M.6.a.(3)
(4) Over five years ........................................................................ | A235 36,761 | M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently ........................................................... | A236 31,182 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ........................ | A237 37,950 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ................. | A238 24,798 | M.6.b.(3)
(4) Less frequently than every five years .................................................. | A239 0 | M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of | ////////////////// |
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above)............... | A240 19,186 | M.6.c.
______________________
</TABLE>
_______________
(1) Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
20
<PAGE> 42
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 6/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-11
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
Deposits of: | ////////////////// |
1. Individuals, partnerships, and corporations ................................................... | 2621 1,730,162 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ................................ | 2623 0 | 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).... | 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks) ............... | 2650 0 | 4.
5. Certified and official checks ................................................................. | 2330 0 | 5.
6. All other deposits ............................................................................ | 2668 15,501 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b) .......................... | 2200 1,745,663 | 7.
Memorandum
Dollar Amounts in Thousands |RCFN Bil Mil Thou |
________________________________________________________________________________________________________________________
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) |A245 1,745,263 | M.1.
______________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F--Other Assets
__________
| C430 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Income earned, not collected on loans ........................................................ | RCFD 2164 167,538 | 1.
2. Net deferred tax assets(1) ................................................................... | RCFD 2148 0 | 2.
3. Excess residential mortgage servicing fees receivable ........................................ | RCFD 5371 134,288 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2168 3,676,812 | 4.
_____________ ___________________________
a. | TEXT 3549 | Mortgages held for Resale | RCFD 3549 | 1,858,683 | /////////////////////// | 4.a.
_________________________________________________________________| | | |
___________
b. | TEXT 3550 |____________________________________________________| RCFD 3550 | | /////////////////////// | 4.b.
___________
c. | TEXT 3551 |____________________________________________________| RCFD 3551 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) ........................... | RCFD 2160 3,978,638 | 5.
___________________________
<CAPTION>
Memorandum ___________________________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes ............................... | RCFD 5610 0 | M.1.
___________________________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G--Other Liabilities
__________
| C435 | <-
_________________ ________
Dollar Amounts in Thousands | ////////// Bil Mil Thou |
__________________________________________________________________________________________________ _________________________
<S> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) ............................ | RCON 3645 58,011 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................. | RCFD 3646 594,954 | 1.b.
2. Net deferred tax liabilities(1) .............................................................. | RCFD 3049 119,644 | 2.
3. Minority interest in consolidated subsidiaries ............................................... | RCFD 3000 0 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)............................. | RCFD 2938 478,843 | 4.
_____________ ___________________________
a. | TEXT 3552 |____________________________________________________| RCFD 3552 | | /////////////////////// | 4.a.
___________
b. | TEXT 3553 |____________________________________________________| RCFD 3553 | | /////////////////////// | 4.b.
___________
c. | TEXT 3554 |____________________________________________________| RCFD 3554 | | /////////////////////// | 4.c.
_____________
___________________________
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) ........................... | RCFD 2930 1,251,452 | 5.
</TABLE>
____________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE> 43
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-12
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
__________
| C440 | <-
____________ ________
| Domestic Offices |
____________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Customers' liability to this bank on acceptances outstanding .................................... | 2155 16,634 | 1.
2. Bank's liability on acceptances executed and outstanding ........................................ | 2920 16,634 | 2.
3. Federal funds sold and securities purchased under agreements to resell .......................... | 1350 17,428 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase ...................... | 2800 4,868,836 | 4.
5. Other borrowed money ............................................................................ | 3190 1,380,694 | 5.
EITHER | ////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs ..................... | 2163 N/A | 6.
OR | ////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs ....................... | 2941 1,669,058 | 7.
| ////////////////// |
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs) . | 2192 48,946,123 | 8.
| ////////////////// |
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)| 3129 42,919,946 | 9.
______________________
</TABLE>
<TABLE>
<CAPTION>
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. ______________________
| RCON Bil Mil Thou |
____________________
<S> <C> <C>
10. U.S. Treasury securities ....................................................................... | 1779 1,252,796 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | ////////////////// |
securities) .................................................................................... | 1785 505 | 11.
12. Securities issued by states and political subdivisions in the U.S. ............................. | 1786 159,244 | 12.
13. Mortgage-backed securities (MBS): | ////////////////// |
a. Pass-through securities: | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1787 5,684,860 | 13.a.(1)
(2) Other pass-through securities ........................................................... | 1869 4 | 13.a.(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | ////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA ............................................ | 1877 0 | 13.b.(1)
(2) All other mortgage-backed securities..................................................... | 2253 518 | 13.b.(2)
14. Other domestic debt securities ................................................................. | 3159 812 | 14.
15. Foreign debt securities ........................................................................ | 3160 97,035 | 15.
16. Equity securities: | ////////////////// |
a. Investments in mutual funds ................................................................. | 3161 0 | 16.a.
b. Other equity securities with readily determinable fair values ............................... | 3162 0 | 16.b.
c. All other equity securities ................................................................. | 3169 311,734 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) .......... | 3170 7,507,508 | 17.
______________________
</TABLE>
<TABLE>
<CAPTION>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
<S> <C> <C>
EITHER | ////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank .............................. | 3051 0 | M.1.
OR | ////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank ................................ | 3059 N/A | M.2.
______________________
</TABLE>
22
<PAGE> 44
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-13
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. __________
| C445 | <-
____________ ________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
_____________________________________________________________________________________________________ ____________________
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12) ................. | 2133 0 | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, | ////////////////// |
column A) ..................................................................................... | 2076 0 | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A) .... | 2077 0 | 3.
4. Total IBF liabilities (component of Schedule RC, item 21) ..................................... | 2898 0 | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | ////////////////// |
part II, items 2 and 3) ....................................................................... | 2379 0 | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6) ..... | 2381 0 | 6.
______________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule RC-K--Quarterly Averages (1)
__________
| C455 | <-
_________________ ________
Dollar Amounts in Thousands | ///////// Bil Mil Thou |
_______________________________________________________________________________________________ _________________________
ASSETS | /////////////////////// |
1. Interest-bearing balances due from depository institutions .............................. | RCFD 3381 10,737 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2) ...... | RCFD 3382 6,349,267 | 2.
3. Securities issued by states and political subdivisions in the U.S.(2) ................... | RCFD 3383 155,938 | 3.
4. a. Other debt securities(2) ............................................................. | RCFD 3647 98,458 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock). | RCFD 3648 347,675 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3365 812,114 | 5.
6. Loans: | ///////////////////// // |
a. Loans in domestic offices: | /////////////////////// |
(1) Total loans ...................................................................... | RCON 3360 31,884,320 | 6.a.(1)
(2) Loans secured by real estate ..................................................... | RCON 3385 14,940,513 | 6.a.(2)
(3) Loans to finance agricultural production and other loans to farmers .............. | RCON 3386 5,935 | 6.a.(3)
(4) Commercial and industrial loans .................................................. | RCON 3387 12,923,362 | 6.a.(4)
(5) Loans to individuals for household, family, and other personal expenditures ...... | RCON 3388 2,224,980 | 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs ............ | RCFN 3360 70,458 | 6.b.
7. Trading assets .......................................................................... | RCFD 3401 105,824 | 7.
8. Lease financing receivables (net of unearned income) .................................... | RCFD 3484 2,231,479 | 8.
9. Total assets (4) ........................................................................ | RCFD 3368 52,282,230 | 9.
LIABILITIES | /////////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits) ............ | RCON 3485 965,535 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////////// |
a. Money market deposit accounts (MMDAs) ................................................ | RCON 3486 9,210,475 | 11.a.
b. Other savings deposits ............................................................... | RCON 3487 3,907,216 | 11.b.
c. Time certificates of deposit of $100,000 or more ..................................... | RCON 3345 2,653,452 | 11.c.
d. All other time deposits .............................................................. | RCON 3469 7,513,443 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs.. | RCFN 3404 1,765,593 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............. | RCFD 3353 6,363,286 | 13.
14. Other borrowed money .................................................................... | RCFD 3355 2,670,145 | 14.
___________________________
</TABLE>
_______________
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or
(2) an average of weekly figures (i.e., the Wednesday of each week of the
quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE> 45
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-14
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts
reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk. __________
| C460 | <-
____________ ________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
____________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unused commitments: | ////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | ////////////////// |
equity lines ............................................................................... | 3814 1,637,875 | 1.a.
b. Credit card lines .......................................................................... | 3815 32,940 | 1.b.
c. Commercial real estate, construction, and land development: | ////////////////// |
(1) Commitments to fund loans secured by real estate ....................................... | 3816 648,369 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate ................................... | 6550 383,022 | 1.c.(2)
d. Securities underwriting .................................................................... | 3817 0 | 1.d.
e. Other unused commitments ................................................................... | 3818 18,626,522 | 1.e.
2. Financial standby letters of credit and foreign office guarantees ............................. | 3819 2,337,268 | 2.
___________________________
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 158,029 | ////////////////// | 2.a.
___________________________
3. Performance standby letters of credit and foreign office guarantees ........................... | 3821 175,703 | 3.
a. Amount of performance standby letters of credit conveyed to | ////////////////// |
___________________________
others .......................................................... | RCFD 3822 | 12,580 | ////////////////// | 3.a.
___________________________
4. Commercial and similar letters of credit ...................................................... | 3411 176,335 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by | ////////////////// |
the reporting bank ............................................................................ | 3428 16,524 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | ////////////////// |
(nonaccepting) bank ........................................................................... | 3429 7,409 | 6.
7. Securities borrowed ........................................................................... | 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | ////////////////// |
against loss by the reporting bank) ........................................................... | 3433 0 | 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for | ////////////////// |
Call Report purposes: | ////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3650 246,244 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3651 246,244 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3652 33,550 | 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3653 33,550 | 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | ////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date ........... | 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date ................... | 3655 0 | 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the | ////////////////// |
Riegle Community Development and Regulatory Improvement Act of 1994: | ////////////////// |
(1) Outstanding principal balance of small business obligations transferred | ////////////////// |
as of the report date................................................................... | A249 0 | 9.d.(1)
(2) Amount of retained recourse on these obligations as of the report date.................. | A250 0 | 9.d.(2)
10. When-issued securities: | ////////////////// |
a. Gross commitments to purchase .............................................................. | 3434 0 | 10.a.
b. Gross commitments to sell .................................................................. | 3435 0 | 10.b.
11. Spot foreign exchange contracts ............................................................... | 8765 622,366 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") | 3430 0 | 12.
a. | TEXT 3555 |______________________________________________________| RCFD 3555 | | ////////////////// | 12.a.
b. | TEXT 3556 |______________________________________________________| RCFD 3556 | | ////////////////// | 12.b.
___________
c. | TEXT 3557 |______________________________________________________| RCFD 3557 | | ////////////////// | 12.c.
_____________
d. | TEXT 3558 |______________________________________________________| RCFD 3558 | | ////////////////// | 12.d.
_____________ _______________________________________________
Dollar Amounts in Thousands RCFD Bil Mil Thou
_________________________________________________________________________________________________________________________
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and | ////////////////// |
describe each component of this item over 25% of Schedule RC,item 28,"Total equity capital") | 5591 0 | 13.
_____________ __________________________
a. | TEXT 5592 |______________________________________________________| RCFD 5592 | | ////////////////// | 13.a.
___________
b. | TEXT 5593 |______________________________________________________| RCFD 5593 | | ////////////////// | 13.b.
___________
c. | TEXT 5594 |______________________________________________________| RCFD 5594 | | ////////////////// | 13.c.
_____________
d. | TEXT 5595 |______________________________________________________| RCFD 5595 | | ////////////////// | 13.d.
_____________
________________________________________________
</TABLE>
24
<PAGE> 46
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-15
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
_____________
| C461 | <-
_________________________________________ ____________________________|___________|
| (Column A) | (Column B) | (Column C) | (Column D) |
| Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
| Contracts | Contracts | Contracts | Contracts |
|___________________|____________________|____________________|____________________|
Dollar Amounts in Thousands |Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou | Tril Bil Mil Thou |
_______________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
| Off-balance Sheet Derivatives | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
| Position Indicators | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
____________________________________| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
14. Gross amounts (e.g., notional | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
amounts) (for each column, sum of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
items 14.a through 14.e must equal | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
sum of items 15, 16.a, and 16.b): |___________________|____________________|___________________ |____________________|
a. Futures contracts ............. | 1,229,392 | 0 | 0 | 36,486 | 14.a.
|___________________|____________________|____________________|____________________|
| RCFD 8693 | RCFD 8694 | RCFD 8695 | RCFD 8696 |
|___________________|____________________|____________________|____________________|
b. Forward contracts ............. | 2,576,500 | 1,931,682 | 0 | 21,832 | 14.b.
|___________________|____________________|____________________|____________________|
| RCFD 8697 | RCFD 8698 | RCFD 8699 | RCFD 8700 |
|___________________|____________________|____________________|____________________|
c. Exchange-traded option contracts:| ///////////////// | ////////////////// | ////////////////// | ////////////////// |
|___________________|____________________|____________________|____________________|
(1) Written options .......... | 0 | 0 | 0 | 0 | 14.c.(1)
|___________________|____________________|____________________|____________________|
| RCFD 8701 | RCFD 8702 | RCFD 8703 | RCFD 8704 |
|___________________|____________________|____________________|____________________|
(2) Purchased options ........ | 450,000 | 0 | 0 | 2,206 | 14.c.(2)
|___________________|____________________|____________________|____________________|
| RCFD 8705 | RCFD 8706 | RCFD 8707 | RCFD 8708 |
|___________________|____________________|____________________|____________________|
d. Over-the-counter option contracts: | //////////////////| ///////////////// | ///////////////// | //////////////// |
(1) Written options .......... | 1,324,980 | 3,887 | 0 | 0 | 14.d.(1)
|___________________|____________________|____________________|____________________|
| RCFD 8709 | RCFD 8710 | RCFD 8711 | RCFD 8712 |
|___________________|____________________|____________________|____________________|
(2) Purchased options ........ | 10,131,934 | 3,887 | 0 | 0 | 14.d.(2)
|___________________|____________________|____________________|____________________|
| RCFD 8713 | RCFD 8714 | RCFD 8715 | RCFD 8716 |
|___________________|____________________|____________________|____________________|
e. Swaps ............................ | 19,502,262 | 0 | 0 | 0 | 14.e.
|___________________|____________________|____________________|____________________|
| RCFD 3450 | RCFD 3826 | RCFD 8719 | RCFD 8720 |
|___________________|____________________|____________________|____________________|
15. Total gross notional amount of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading ......................... | 3,386,305 | 1,939,456 | 0 | 2,206 | 15.
|___________________|____________________|____________________|____________________|
| RCFD A126 | RFD A127 | RCFD 8723 | RCFD 8724 |
|___________________|____________________|____________________|____________________|
16. Total gross notional amount of | ///////////////// | //////////////// | ///////////////// | ////////////////// |
derivative contracts held for | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
purposes other than trading: | ///////////////// | ///////////////// | ///////////////// | ////////////////// |
|___________________|____________________|____________________|____________________|
a. Contracts marked to market ... | 4,202,500 | 0 | 0 | 36,486 | 16.a.
|___________________|____________________|____________________|____________________|
| RCFD 8725 | RCFD 8726 | RCF 8727 | RCFD 8728 |
|___________________|____________________|____________________|____________________|
b. Contracts not marked to market | 27,626,263 | 0 | 0 | 21,832 | 16.b.
|___________________|____________________|____________________|____________________|
| RCFD 8729 | RCFD 8730 | RFD 8731 | RCFD 8732 |
|___________________|____________________|____________________|____________________|
</TABLE>
25
<PAGE> 47
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-16
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-L -- Continued
<CAPTION>
_________________________________________ _________________________________________
| (Column A) | (Column B) | (Column C) | (Column D) |
Dollar Amounts in Thousands | Interest Rate | Foreign Exchange | Equity Derivative | Commodity and other|
___________________________________| Contracts | Contracts | Contracts | Contracts |
| Off-balance Sheet Derivatives |___________________|____________________|____________________|____________________|
| Position Indicators |RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
|_____________________________________________________________________________________________________________________|
<S> <C> <C> <C> <C> <C>
17. Gross fair values of | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
derivative contracts: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
a. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8733 29,782 | 8734 41,523 | 8735 0 | 8736 58 | 17.a.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8737 20,932 | 8738 36,511 | 8739 0 | 8740 0 | 17.a.(2)
b. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are marked | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8741 524 | 8742 0 | 8743 0 | 8744 1,452 | 17.b.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8745 2,834 | 8746 0 | 8747 0 | 8748 0 | 17.b.(2)
c. Contracts held for | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
purposes other than | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
trading that are not | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
marked to market: | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
(1) Gross positive | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value .................. | 8749 64,085 | 8750 0 | 8751 0 | 8752 100 | 17.c.(1)
(2) Gross negative | ///////////////// | ////////////////// | ////////////////// | ////////////////// |
fair value ................... | 8753 111,703 | 8754 0 | 8755 0 | 8756 0 | 17.c.(2)
|__________________________________________________________________________________|
</TABLE>
<TABLE>
<CAPTION>
______________________
Memoranda Dollar Amounts in Thousands | RCFD Bil Mil Thou |
_________________________________________________________________________________________________________________________
<S> <C> <C>
1. -2. Not applicable | ////////////////// |
3. Unused commitments with an original maturity exceeding one year that are reported in | ////////////////// |
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments | ////////////////// |
that are fee paid or otherwise legally binding) ................................................ | 3833 16,829,602 | M.3.
a. Participations in commitments with an original maturity | ////////////////// |
exceeding one year conveyed to others ................................|RCFD 3834 | 1,310,691 | ////////////////// | M.3.a.
________________________
4. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Standby letters of credit and foreign office guarantees (both financial and performance) issued | ////////////////// |
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. | 3377 341,139 | M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that | ////////////////// |
have been securitized and sold without recourse (with servicing retained), amounts outstanding | ////////////////// |
by type of loan: | ////////////////// |
a. Loans to purchase private passenger automobiles (to be completed for the | ////////////////// |
September report only)....................................................................... | 2741 N/A | M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)................................... | 2742 0 | M.5.b.
c. All other consumer installment credit (including mobile home loans)(to be completed for the | ////////////////// |
September report only........................................................................ | 2743 N/A | M.5.c
|____________________|
</TABLE>
26
<PAGE> 48
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-17
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9| _____________
| C465 |
_________|___________|
Schedule RC-M--Memoranda | |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
______________________________________________________________________________________________________|____________________|
<S> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal | ////////////////// |
shareholders, and their related interests as of the report date: | ////////////////// |
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal | ////////////////// |
shareholders and their related interests ..................................................... | 6164 605,294 | 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of all | ////////////////// |
extensions of credit by the reporting bank (including extensions of credit to | ////////////////// |
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number | ////////////////// |
___________________________| ////////////////// |
of total capital as defined for this purpose in agency regulations. | RCFD 6165 | 24 | ////////////////// |
___________________________| ////////////////// | 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches | ////////////////// |
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b) .................... | 3405 0 | 2.
3. Not applicable. | ////////////////// |
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others | ////////////////// |
(include both retained servicing and purchased servicing): | ////////////////// |
a. Mortgages serviced under a GNMA contract ...................................................... | 5500 28,855,729 | 4.a.
b. Mortgages serviced under a FHLMC contract: | ////////////////// |
(1) Serviced with recourse to servicer ........................................................ | 5501 55,604 | 4.b.(1)
(2) Serviced without recourse to servicer ..................................................... | 5502 32,340,522 | 4.b.(2)
c. Mortgages serviced under a FNMA contract: | ////////////////// |
(1) Serviced under a regular option contract .................................................. | 5503 190,640 | 4.c.(1)
(2) Serviced under a special option contract .................................................. | 5504 38,282,672 | 4.c.(2)
d. Mortgages serviced under other servicing contracts ............................................ | 5505 8,508,320 | 4.d.
5. To be completed only by banks with $1 billion or more in total assets: | ////////////////// |
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must | ////////////////// |
equal Schedule RC, item 9): | ////////////////// |
a. U.S. addressees (domicile) .................................................................... | 2103 16,297 | 5.a.
b. Non-U.S. addressees (domicile) ................................................................ | 2104 337 | 5.b.
6. Intangible assets: | ////////////////// |
a. Mortgage servicing rights ..................................................................... | 3164 1,483,959 | 6.a.
b. Other identifiable intangible assets: | ////////////////// |
(1) Purchased credit card relationships ....................................................... | 5506 0 | 6.b.(1)
(2) All other identifiable intangible assets .................................................. | 5507 126,463 | 6.b.(2)
c. Goodwill ...................................................................................... | 3163 672,992 | 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ........................ | 2143 2,283,414 | 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or | ////////////////// |
are otherwise qualifying for regulatory capital purposes ...................................... | 6442 0 | 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to | ////////////////// |
redeem the debt ...................................................................................| 3295 75,000 | 7.
______________________
</TABLE>
- ------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
27
<PAGE> 49
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-18
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
Schedule RC-M--Continued ________________________
Dollar Amounts in Thousands | Bil Mil Thou|
_____________________________________________________________________________________________ |_______________________|
<S> <C> <C>
8. a. Other real estate owned: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5372 0 | 8.a.(1)
(2) All other real estate owned: | /////////////////////// |
(a) Construction and land development in domestic offices ....................... | RCON 5508 4,537 | 8.a.(2)(a)
(b) Farmland in domestic offices ................................................ | RCON 5509 0 | 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices ....................... | RCON 5510 8,067 | 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices .......... | RCON 5511 740 | 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices ....................... | RCON 5512 21,202 | 8.a.(2)(e)
(f) In foreign offices .......................................................... | RCFN 5513 0 | 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ....... | RCFD 2150 34,546 | 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: | /////////////////////// |
(1) Direct and indirect investments in real estate ventures ......................... | RCFD 5374 0 | 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies ... | RCFD 5375 0 | 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ....... | RCFD 2130 0 | 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies ................ | RCFD 5376 0 | 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, | /////////////////////// |
item 23, "Perpetual preferred stock and related surplus" ............................... | RCFD 3778 125,000 | 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include | /////////////////////// |
proprietary, private label, and third party products): | /////////////////////// |
a. Money market funds .................................................................. | RCON 6441 55,245 | 10.a.
b. Equity securities funds ............................................................. | RCON 8427 108,359 | 10.b.
c. Debt securities funds ............................................................... | RCON 8428 13,250 | 10.c.
d. Other mutual funds .................................................................. | RCON 8429 0 | 10.d.
e. Annuities ........................................................................... | RCON 8430 102,292 | 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a through | /////////////////////// |
10.e. above) ........................................................................... | RCON 8784 150,100 | 10.f.
_________________________
</TABLE>
<TABLE>
<CAPTION>
_________________________________________________________________________________________________________________________________
| |
______________________
|Memorandum Dollar Amounts in Thousands | RCFD Bil Mil Thou | |
_________________________________________________________________________________________________ ____________________
<S> <C> <C>
|1. Interbank holdings of capital instruments (to be completed for the December report only): | ////////////////// | |
| a. Reciprocal holdings of banking organizations' capital instruments ........................ | 3836 N/A | M.1.a. |
| b. Nonreciprocal holdings of banking organizations' capital instruments ..................... | 3837 N/A | M.1.b. |
______________________
| |
_________________________________________________________________________________________________________________________________
</TABLE>
28
<PAGE> 50
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-19
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
The FFIEC regards the information reported in __________
all of Memorandum item 1, in items 1 through 10, | C470 | <-
column A, and in Memorandum items 2 through 4, ______________________________________________________ ________
column A, as confidential. | (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Loans secured by real estate: | ////////////////// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1245 | 1246 71,390 | 1247 223,962 | 1.a.
b. To non-U.S. addressees (domicile) ............ | 1248 | 1249 0 | 1250 0 | 1.b.
2. Loans to depository institutions and | ///// | ////////////////// | ////////////////// |
acceptances of other banks: | ///// | ////////////////// | ////////////////// |
a. To U.S. banks and other U.S. depository | ///// | ////////////////// | ////////////////// |
institutions ................................. | 5377 | 5378 0 | 5379 0 | 2.a.
b. To foreign banks ............................. | 5380 | 5381 0 | 5382 0 | 2.b.
3. Loans to finance agricultural production and | ///// | ////////////////// | ////////////////// |
other loans to farmers .......................... | 1594 | 1597 385 | 1583 531 | 3.
4. Commercial and industrial loans: | ///// | ////////////////// | ////////////////// |
a. To U.S. addressees (domicile) ................ | 1251 | 1252 11,945 | 1253 108,334 | 4.a.
b. To non-U.S. addressees (domicile) ............ | 1254 | 1255 0 | 1256 0 | 4.b.
5. Loans to individuals for household, family, and | ///// | ////////////////// | ////////////////// |
other personal expenditures: | ///// | ////////////////// | ///////////////// |
a. Credit cards and related plans ............... | 5383 | 5384 1,187 | 5385 669 | 5.a.
b. Other (includes single payment, installment, | ///// | ////////////////// | ////////////////// |
and all student loans) ....................... | 5386 | 5387 22,600 | 5388 8,465 | 5.b.
6. Loans to foreign governments and official | ///// | ////////////////// | ////////////////// |
institutions .................................... | 5389 | 5390 0 | 5391 0 | 6.
7. All other loans ................................. | 5459 | 5460 14,909 | 5461 1,919 | 7.
8. Lease financing receivables: | ///// | ////////////////// | ////////////////// |
a. Of U.S. addressees (domicile) ................ | 1257 | 1258 95 | 1259 6,544 | 8.a.
b. Of non-U.S. addressees (domicile) ............ | 1271 | 1272 0 | 1791 0 | 8.b.
9. Debt securities and other assets (exclude other | ///// | ////////////////// | ////////////////// |
real estate owned and other repossessed assets) . | 3505 | 3506 0 | 3507 85,778 | 9.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
________________________________________________________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
10. Loans and leases reported in items 1 | | | |
through 8 above which are wholly or partially | ///// | ////////////////// | ////////////////// |
guaranteed by the U.S. Government ............... | 5612 | 5613 18,447 | 5614 21,415 | 10.
a. Guaranteed portion of loans and leases | ///// | ////////////////// | ////////////////// |
included in item 10 above .................... | 5615 | 5616 18,250 | 5617 16,952 | 10.a.
________________________________________________________________
</TABLE>
29
<PAGE> 51
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-20
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-N--Continued
__________
| C473 | <-
______________________________________________________ ________
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
Memoranda | accruing | accruing | |
____________________ ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________ ____________________ ____________________ ____________________
<S> <C> <C> <C> <C>
1. Restructured loans and leases included in | ///// | /////////////////// | ///////////////// |
Schedule RC-N, items 1 through 8, above (and not | ///// | //// | |
reported in Schedule RC-C, part I, Memorandum | ///// | //// | |
item 2) ......................................... | 1658 | 1659 | | M.1.
2. Loans to finance commercial real estate, | ///// | //// | |
construction, and land development activities | ///// | //// | |
(not secured by real estate) included in | ///// | /////////////////// | ///////////////// |
Schedule RC-N, items 4 and 7, above ............. | 6558 | 6559 826 | 6560 7,043 | M.2.
|____________________|____________________ |___________________
3. Loans secured by real estate in domestic offices | RCON | RCON Bil Mil Thou | RCON Bil Mil Thou|
|___________________ |____________________ ____________________
(included in Schedule RC-N, item 1, above): | ///// | ////////////////// | ////////////////// |
a. Construction and land development ............ | 2759 | 2769 1,100 | 3492 26,422 | M.3.a.
b. Secured by farmland .......................... | 3493 | 3494 161 | 3495 0 | M.3.b.
c. Secured by 1-4 family residential properties: | ///// | ////////////////// | ////////////////// |
(1) Revolving, open-end loans secured by | ///// | ////////////////// | ////////////////// |
1-4 family residential properties and | ///// | ////////////////// | ////////////////// |
extended under lines of credit ........... | 5398 | 5399 5,114 | 5400 17,374 | M.3.c.(1)
(2) All other loans secured by 1-4 family | ///// | ////////////////// | ////////////////// |
residential properties ................... | 5401 | 5402 58,079 | 5403 75,430 | M.3.c.(2)
d. Secured by multifamily (5 or more) | ///// | ////////////////// | ////////////////// |
residential properties ....................... | 3499 | 3500 521 | 3501 12,491 | M.3.d.
e. Secured by nonfarm nonresidential properties . | 3502 | 3503 6,415 | 3504 92,245 | M.3.e.
________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other | ///// | ////////////////// |
commodity and equity contracts: | ///// | ////////////////// |
a. Book value of amounts carried as assets ...... | 3522 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | ///// | ////////////////// |
positive replacement cost .................... | 3529 | 3530 0 | M.4.b.
___________________________________________
</TABLE>
30
<PAGE> 52
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-21
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
______________________
Schedule RC-O--Other Data for Deposit Insurance Assessments | C475 |
|____________________|
Dollar Amounts in Thousands | RCON Bil Mil Thou |
___________________________________________________________________________________________________ ____________________
<S> <C> <C>
1. Unposted debits (see instructions): | ////////////////// |
a. Actual amount of all unposted debits ...................................................... | 0030 216 | 1.a.
OR | ////////////////// |
b. Separate amount of unposted debits: | ////////////////// |
(1) Actual amount of unposted debits to demand deposits ................................... | 0031 N/A | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ...................... | 0032 N/A | 1.b.(2)
2. Unposted credits (see instructions): | ////////////////// |
a. Actual amount of all unposted credits ..................................................... | 3510 216 | 2.a.
OR | ////////////////// |
b. Separate amount of unposted credits: | ////////////////// |
(1) Actual amount of unposted credits to demand deposits .................................. | 3512 N/A | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ..................... | 3514 N/A | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 3520 101,763 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in | ////////////////// |
Puerto Rico and U.S. territories and possessions (not included in total deposits): | ////////////////// |
a. Demand deposits of consolidated subsidiaries .............................................. | 2211 206,111 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries ................................. | 2351 20,089 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries ...................... | 5514 8 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | ////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II) .................. | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II) ..... | 2383 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | ////////////////// |
(included in Schedule RC-G, item 1.b) ..................................................... | 5515 0 | 5.c.
______________________
______________________
Item 6 is not applicable to state nonmember banks that have not been authorized by the | ////////////////// |
Federal Reserve to act as pass-through correspondents. | ////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | ////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit liabilities| ////////////////// |
of the reporting bank: | ////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, item 4 or 5, column B)..... | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | ////////////////// |
item 4 or 5, column A or C, but not column B).............................................. | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | ////////////////// |
a. Unamortized premiums ...................................................................... | 5516 769 | 7.a.
b. Unamortized discounts ..................................................................... | 5517 0 | 7.b.
______________________
_______________________________________________________________________________________________________________________________
| |
|8. To be completed by banks with "Oakar deposits." |
______________________
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of | ////////////////// | |
| the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)) .... | 5518 2,188,589 | 8. |
______________________
| |
_______________________________________________________________________________________________________________________________
______________________
9. Deposits in lifeline accounts ................................................................ | 5596 ///////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | ////////////////// |
deposits in domestic offices) ................................................................ | 8432 0 | 10.
______________________
______________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
</TABLE>
31
<PAGE> 53
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-22
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued
Dollar Amounts in Thousands | RCON Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
<S> <C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for | ////////////////// |
certain reciprocal demand balances: | ////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | ////////////////// |
between the reporting bank and savings associations were reported on a net basis | ////////////////// |
rather than a gross basis in Schedule RC-E .................................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | ////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | ////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-E .......................... | A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | ////////////////// |
collection were included in the calculation of net reciprocal demand balances between | ////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | ////////////////// |
in Schedule RC-E ............................................................................ | A182 0 | 11.c.
____________________
Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands | RCON Bil Mil Thou |
_____________________________________________________________________ ___________________________|____________________|
1. Total deposits in domestic offices of the bank (sum of Memorandum it ems 1.a. (1) and | ////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | ////////////////// |
a. Deposits accounts of $100,000 or less: | ////////////////// |
(1) amount of deposit accounts of $100,000 or less ....................................... | 2702 19,755,631 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | ////////////////// |
completed for the June report only) .............................|RCON 3779 3,742,107 | ////////////////// | M.1.a.(2)
b. Deposit accounts of more than $100,000: | ////////////////// |
(1) Amount of deposit accounts of more than $100,000 ..................................... | 2710 14,354,949 | M.1.b.(1)
Number | ////////////////// |
(2) Number of deposit accounts of more than $100,000 ................|RCON 2722 27,062 | ////////////////// | M.1.b.(2)
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by mutiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the ____________YES_______NO__
estimated described above .................................................................. | 6861| |///| x | M.2.a.
____________________
b. If the box marked YES has been checked, report the estimate of uninsured deposits |RCON Bil Mil Thou|
determined by using your bank's method or procedure .................................... | 5597 N/A | M.2.b.
_____________________________________________________________________________________________________________________________
| C477 | <-
Person to whom questions about the Reports of Condition and Income should be directed: __________
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
___________________________________________________________________________________ ______________________________________
Name and Title (TEXT 8901) Area code and phone number (TEXT 8902)
</TABLE>
32
<PAGE> 54
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-23
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than
$1 billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C>
____________
| C480 | <-
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed _____|__________|
only by banks with total assets of less than $1 billion. Indicate in the appropriate | YES NO |
box at the right whether the bank has total capital greater than or equal to eight percent___________ _______________
of adjusted total assets ............................................................... | RCFD 6056 | |////| | 1.
_____________________________
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government
agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan
and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked
NO has been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
___________________________________________
| (Column A) | (Column B) |
|Subordinated Debt(1)| Other |
_________________________________________________________________ | and Intermediate | Limited- |
| NOTE: All banks are required to complete items 2 and 3 below | | Term Preferred | Life Capital |
| See optional worksheet for items 3.a through 3.f. | | Stock | Instruments |
|________________________________________________________________| ____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original | | |
weighted average maturity of at least five years) with a remaining | | |
maturity of: | | |
a. One year or less ...................................................... | 3780 25,737 | 3786 0 | 2.a.
b. Over one year through two years ....................................... | 3781 737 | 3787 0 | 2.b.
c. Over two years through three years .................................... | 3782 10,745 | 3788 0 | 2.c.
d. Over three years through four years ................................... | 3783 0 | 3789 0 | 2.d.
e. Over four years through five years .................................... | 3784 0 | 3790 0 | 2.e.
f. Over five years ....................................................... | 3785 1,101,000 | 3791 0 | 2.f.
3. Amounts used in calculating regulatory capital ratios (report amounts | ////////////////// | ////////////////// |
determined by the bank for its own internal regulatory capital analyses): | ////////////////// | RCFD Bil Mil Thou |
a. Tier 1 capital......................................................... | ////////////////// | 8274 3,590,367 | 3.a.
b. Tier 2 capital......................................................... | ////////////////// | 8275 1,755,646 | 3.b.
c. Total risk-based capital............................................... | ////////////////// | 3792 5,346,013 | 3.c.
d. Excess allowance for loan and lease losses............................. | ////////////////// | A222 297,250 | 3.d.
e. Risk-weighted assets................................................... | ////////////////// | A223 45,718,856 | 3.e.
f. "Average total assets"................................................. | ////////////////// | A224 51,482,775 | 3.f.
___________________________________________
| (Column A) | (Column B) |
Items 4-9 and Memoranda items 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
____________________ ____________________
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
____________________ ____________________
<S> <C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items assigned | | |
to the Zero percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Securities issued by, other claims on, and claims unconditionally | ////////////////// | ////////////////// |
guaranteed by, the U.S. Government and its agencies and other | ////////////////// | ////////////////// |
OECD central governments .......................................... | 3794 2,147,648 | ////////////////// | 4.a.(1)
(2) All other ......................................................... | 3795 1,115,265 | ////////////////// | 4.a.(2)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3796 101,488 | 4.b.
___________________________________________
</TABLE>
_____
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE> 55
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
Address: ONE MONARCH PLACE Page RC-24
City, State Zip: SPRINGFIELD, MA 01102
FDIC Certificate No.: |0|2|4|9|9|
___________
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-R--Continued
___________________________________________
| (Column A) | (Column B) |
| Assets | Credit Equiv- |
| Recorded | alent Amount |
| on the | of Off-Balance |
| Balance Sheet | Sheet Items(1) |
____________________ ____________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
______________________________________________________________________________ ____________________ ____________________
<S> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 20 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet: | ////////////////// | ////////////////// |
(1) Claims conditionally guaranteed by the U.S. Government and its | ////////////////// | ////////////////// |
agencies and other OECD central governments ....................... | 3798 714,375 | ////////////////// | 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Govern- | ////////////////// | ////////////////// |
ment and its agencies and other OECD central governments; by | ////////////////// | ////////////////// |
securities issued by U.S. Government-sponsored agencies; and | ////////////////// | ////////////////// |
by cash on deposit ................................................ | 3799 0 | ////////////////// | 5.a.(2)
(3) All other ......................................................... | 3800 8,774,345 | ////////////////// | 5.a.(3)
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3801 791,065 | 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 50 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3802 5,265,173 | ////////////////// | 6.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3803 409,680 | 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items | ////////////////// | ////////////////// |
assigned to the 100 percent risk category: | ////////////////// | ////////////////// |
a. Assets recorded on the balance sheet .................................. | 3804 31,799,547 | ////////////////// | 7.a.
b. Credit equivalent amount of off-balance sheet items ................... | ////////////////// | 3805 10,122,631 | 7.b.
8. On-balance sheet asset values excluded from the calculation of the | ////////////////// | ////////////////// |
risk-based capital ratio(2) .............................................. | 3806 83,713 | ////////////////// | 8.
9. Total assets recorded on the balance sheet (sum of | ////////////////// | ////////////////// |
items 4.a, 5.a, 6.a, 7.a, and 8, column A)(must equal Schedule RC, | ////////////////// | ////////////////// |
item 12 plus items 4.b and 4.c) .......................................... | 3807 49,900,066 | ////////////////// | 9.
___________________________________________
Memoranda
______________________
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
__________________________________________________________________________________________________ ____________________
1.Current credit exposure across all off-balance sheet derivative contracts covered by the | ///////////////// |
risked-based capital standards .................................................................| 8764 135,825| M.1.
|___________________|
_____________________________________________________________________
| With a remaining maturity of |
|____________________________________________________________________|
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
|______________________|______________________|______________________|
|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|RCFD Tril Bil Mil Thou|
|______________________|______________________|______________________|
2. Notional principal amounts of | | | |
off-balance sheet derivative contracts(3):| | | |
a. Interest rate contracts ................. | 3809 8,320,956 | 8766 18,597,686 | 8767 801,055 | M.2.a.
b. Foreign exchange contracts .............. | 3812 1,578,420 | 8769 101,907 | 8770 0 | M.2.b.
c. Gold contracts .......................... | 8771 15,291 | 8772 0 | 8773 0 | M.2.c.
d. Other precious metals contracts ......... | 8774 8,748 | 8775 0 | 8776 0 | M.2.d.
e. Other commodity contracts ............... | 8777 0 | 8778 0 | 8779 0 | M.2.e.
f. Equity derivative contracts ............. | A000 0 | A001 0 | A002 0 | M.2.f.
|____________________________________________________________________|
</TABLE>
_________________
1) Do not report in column B the risk-weighted amount of
assets reported in column A.
2) Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of these
securities in items 4 through 7 above. Item 8 also includes on-balance sheet
asset values (or portions thereof) of off-balance sheet interest rate, foreign
exchange rate, and commodity contracts and those contracts (e.g., futures
contracts) not subject to risk-based capital. Exclude from item 8 margin
accounts and accrued receivables as well as any portion of the allowance for
loan and lease losses in excess of the amount that may be included in Tier 2
capital. 3) Exclude foreign exchange contracts with an original maturity of 14
days or less and all futures contracts.
34
<PAGE> 56
<TABLE>
<S> <C>
Legal Title of Bank: FLEET NATIONAL BANK
Address: ONE MONARCH PLACE Call Date: 06/30/96 ST-BK: 25-0590 FFIEC 031
City, State, Zip: SPRINGFIELD, MA 01102 Page RC-25
FDIC Certificate No.: 02499
</TABLE>
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on June 30, 1996
FLEET NATIONAL BANK SPRINGFIELD , MASSACHUSETTS
- ------------------- ----------------- -------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public.
BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL
BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS
IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE
MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks
choosing not to make a statement may check the "No comment" box below and
should make no entries of any kind in the space provided for the narrative
statement; i.e., DO NOT enter in this space such phrases as "No statement,"
"Not applicable," "N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should
not exceed 100 words. Further, regardless of the number of words, the
statement must not exceed 750 characters, including punctuation, indentation,
and standard spacing between words and sentences. If any submission should
exceed 750 characters, as defined, it will be truncated at 750 characters with
no notice to the submitting bank and the truncated statement will appear as the
bank's statement both on agency computerized records and in computer-file
releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
__________________________________________________________________________
No comment |X| (RCON 6979) | c471 | C472 |<-
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
/s/__Gero DeRosa_______________________________ ___7/25/96________
Signature of Executive Officer of Bank Date of Signature
35
