<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1997
REGISTRATION NO. 333-27351
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
Amendment No. 1
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>
<C> <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>
<C> <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>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT* OFFERING PRICE* REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass Through Certificates..... $95,000,000 100% $95,000,000 $28,787.88
- ------------------------------------------------------------------------------------------------------------------------
</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 June 4, 1997
$95,000,000
[AMERICA WEST LOGO]
America West Airlines
1997-1 Pass Through Trusts
PASS THROUGH CERTIFICATES, SERIES 1997-1
------------------------
Each Pass Through Certificate (collectively, the "Certificates") will
represent a fractional undivided interest in one of the four America West
Airlines 1997-1 Pass Through Trusts (the "Class A Trust", the "Class B Trust",
the "Class C Trust" and the "Class D Trust" and, collectively, the "Trusts") to
be formed pursuant to a pass through trust agreement (the "Basic Agreement") and
four separate supplements thereto (each, a "Trust Supplement" and together with
the Basic Agreement, collectively, the "Pass Through Trust Agreements") between
America West Airlines, Inc. ("AWA") 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 and the Class D Trust are referred to
herein as "Class A Certificates", "Class B Certificates", "Class C Certificates"
and "Class D 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 and (iii) the Class D Certificates will be subordinated in right of
payment to the Class C Certificates. Payments of interest on the Class A, Class
B, and Class C Certificates (but not the Class D 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 26 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>
PASS THROUGH FINAL EXPECTED PRICE TO
CERTIFICATES PRINCIPAL AMOUNT(1) INTEREST RATE DISTRIBUTION DATE(1) PUBLIC(2)(3)
------------ ---------------------- ---------------------- ---------------------- ----------------------
<C> <C> <C> <C> <C>
Class A $45,753,110 % July 2, 2008 100%
Class B 17,026,464 July 2, 2005 100
Class C 17,116,098 January 2, 2004 100
Class D 14,153,323 July 2, 2001 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 June , 1997.
(3) The aggregate commission payable to the Underwriter 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 a
U.S.-domiciled subsidiary 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 Underwriter, subject to
prior sale, when, as and if accepted by the Underwriter and subject to approval
of certain legal matters by Milbank, Tweed, Hadley & McCloy, counsel for the
Underwriter. It is expected that delivery of the Certificates in book-entry form
will be made on or about June , 1997 through the facilities of The Depository
Trust Company, against payment therefor in immediately available funds.
------------------------
MORGAN STANLEY DEAN WITTER
June , 1997
<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 four separate leveraged lease transactions to
refinance the current indebtedness of such Owner Trustees previously incurred to
finance the purchase of four Airbus Industrie model A320-231 aircraft
(collectively, the "Aircraft") which will be leased to AWA. The Equipment Notes
in respect of each Aircraft will be issued in four series (the "Series A
Equipment Notes", the "Series B Equipment Notes", the "Series C Equipment Notes"
and the "Series D Equipment Notes"). Each Trust will purchase one series of
Equipment Notes issued with respect to the Aircraft 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
will be secured by a security interest in such Aircraft 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 by AWA. Although neither the Certificates nor the Equipment
Notes are obligations of, or guaranteed by, AWA, the aggregate amounts
unconditionally payable by AWA for lease of the Aircraft 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, 1998. 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, 1998, 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 June , 1997 (the "Closing Date"), without regard to the date on
which the Underwriter enters 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 AWA, THE
UNDERWRITER 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 AWA SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CERTIFICATES.
SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND
MAY BID FOR, AND PURCHASE, THE CERTIFICATES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
------------------------
AVAILABLE INFORMATION AND REPORTS TO CERTIFICATEHOLDERS
AWA 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.
AWA is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports and other information with the Commission. Reports and other information
concerning AWA 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. Warrants to purchase Class B Common Stock of America West
Holdings Corporation are listed on the New York Stock Exchange and AWA'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".
AWA 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 AWA, which have been filed with the Commission,
are hereby incorporated by reference in this Prospectus:
1. The Annual Report on Form 10-K for the year ended December 31,
1996;
2. The portions of the definitive Proxy Statement for the Annual
Meeting of Stockholders of America West Holdings Corporation held on May 2,
1997 that have been incorporated by reference into the Form 10-K; and
3. The Quarterly Report on Form 10-Q for the quarter ended March 31,
1997.
All documents filed by AWA 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. AWA's file number is 1-10140.
AWA 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., 51 W. Third Street, Tempe,
Arizona 85281, telephone number (602) 693-0800.
FORWARD LOOKING INFORMATION
This Prospectus contains or incorporates by reference various
forward-looking statements and information that are based on AWA's beliefs as
well as assumptions made by and information currently available to AWA. 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 Prospectus, the words
"anticipate," "estimates," "expects," "believes," "seeks," "goals," "intends" or
"projects" 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, expected or projected. Among the
key factors that may have a direct bearing on AWA's results are competitive
practices in the airline industry generally and particularly in AWA's principal
markets, the ability of AWA to meet existing financial obligations in the event
of adverse industry or economic conditions or to obtain additional capital to
fund future significant commitments and expansion, AWA'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 AWA's operations. For additional discussion of such risks,
see "Risk Factors -- Company and Industry Related Risks".
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................................................ 26
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................................. 37
Business.................................................... 46
Management.................................................. 56
Certain Transactions........................................ 60
Description of the Certificates............................. 63
Description of the Liquidity Facilities..................... 75
Description of the Intercreditor Agreement.................. 79
Description of the Aircraft and the Appraisals.............. 82
Description of the Equipment Notes.......................... 83
Certain U.S. Federal Income Tax Consequences................ 101
State Tax Considerations.................................... 103
ERISA Considerations........................................ 104
Underwriting................................................ 106
Legal Matters............................................... 107
Experts..................................................... 107
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.
America West Holdings Corporation ("Holdings") is a Delaware corporation
that became the holding company for America West Airlines, Inc. effective
midnight December 31, 1996. The only material asset of Holdings is the capital
stock of AWA. Unless otherwise indicated, the term "AWA" refers to America West
Airlines, Inc. and the terms "the Company" and "America West" both refer
collectively to Holdings and AWA, its direct wholly owned subsidiary.
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.
AMERICA WEST AIRLINES, INC.
AWA 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. Management believes AWA is the
lowest cost full service carrier in the United States. At March 31, 1997, AWA
served 57 destinations, including six destinations in Mexico and one in Canada,
with a fleet of 101 aircraft. AWA offers service to an additional 17
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").
AWA is the leading airline serving Phoenix and Las Vegas, with
approximately 36% and 23% of total revenue passenger miles, respectively, based
on the twelve months ended December 31, 1996. The Phoenix and Las Vegas airports
are the seventh and thirteenth largest airports and the fifth and eighth largest
domestic hubs in the United States as measured by passenger enplanements. AWA
believes that these hubs are well positioned for continued growth due to their
geographically favorable locations with access to key southwestern and west
coast markets, relatively low operating costs, year-round fair weather and
modern, uncongested facilities. Substantially all of AWA's passenger traffic is
channeled into or through its hubs, which serve as gateways for AWA's route
network. Through its hub-and-spoke system, AWA serves more markets with greater
frequency than would be possible with the same number of aircraft in a
point-to-point route system.
AWA operates with a low cost structure. AWA's operating cost per available
seat mile ("ASM") for the first three months of 1997 was 7.40 cents, which was
approximately 21.1% less than the average cost per ASM of the nine major
domestic airlines. AWA believes that its low cost structure is a significant
competitive advantage relative to other full service carriers and also enables
AWA to compete effectively against low cost carriers in its short-haul local
markets. As a full service airline, AWA believes that it distinguishes itself
from other low cost carriers by offering passenger services that include
assigned seating, meal service on selected flights, participation in
computerized reservation systems, interline ticketing, first class cabins,
baggage transfer and various other services.
Through its America West Vacations division ("America West Vacations"), AWA
arranges and sells vacation packages that include hotel accommodations, air
fare, ground transportation and a variety of entertainment options. This
business unit generated approximately $190 million in gross package sales in
1996. America West Vacations occupies a substantial position in the Las Vegas
destination market and arranges packages for travel to the other traditional
vacation destinations served by AWA, including Arizona, California, Florida,
Canada and Mexico. To further develop this business, the Company intends to
combine America West Vacations with AWA's charter business and reorganize such
operations as a separate subsidiary of Holdings during 1997.
6
<PAGE> 8
BUSINESS STRATEGY
The Company's strategy seeks to achieve revenue growth and profitability by
capitalizing on its key competitive strengths while maximizing financial
flexibility. The principal elements of the Company's strategy are (i)
strengthening AWA's position in its existing hubs through strategic expansion,
(ii) maintaining AWA's position as a leading low cost full service carrier,
(iii) focusing on airline reliability and customer service, (iv) operating a
modern and efficient fleet, (v) continuing to develop AWA's passenger base
through key alliances and (vi) pursuing opportunities to expand its leisure
travel businesses.
STRENGTHEN POSITION IN EXISTING HUBS THROUGH STRATEGIC EXPANSION.
AWA's strategy is designed to capitalize on its strong position in its
Phoenix and Las Vegas hubs. In February 1996, AWA began implementation of a
two-year plan to expand its principal hub operations and increase connecting
traffic and service to longer-haul nonstop markets. Pursuant to this plan,
during 1996 AWA increased ASMs by 11.3% and added six new cities to AWA's route
network. In addition, AWA has increased flight frequencies to enhance service to
existing West Coast destinations and to expand connecting opportunities through
Phoenix to long-haul flights to the East and Midwest. AWA has also sought to
increase asset utilization through the expansion of its night flight service to
Las Vegas, utilizing aircraft for this service that otherwise would be idle
overnight. Pursuant to the growth plan, AWA added one new city to its route
network in the first-quarter of 1997 and expects to introduce service to at
least one additional city by December 31, 1997.
MAINTAIN ITS POSITION AS A LEADING LOW COST AIRLINE.
AWA is committed to maintaining its low cost structure, which it has
achieved primarily through employee productivity, favorable labor costs per ASM
and industry-leading asset utilization. AWA maintained low unit costs by
focusing on productivity at all levels. In 1996, AWA increased its ASMs by 11.3%
while increasing its full-time equivalent head count by 10.8%.
FOCUS ON RELIABILITY AND CUSTOMER SERVICE.
AWA is committed to maintaining its reliability and to improving its
overall customer service. As a result of customer service and operational issues
encountered in the third quarter of 1996, AWA initiated a program entitled Get
the Product Right . . . Together, aimed at maximizing the airline's reliability
and further improving customer service. Consistent with its strategy of being a
low cost airline, this program is designed to be implemented without adversely
affecting AWA's cost structure. In May 1997, AWA was ranked number one in
customer satisfaction among the nine major domestic airlines, for flights of 500
miles or less, in the Airline Customer Satisfaction -- U.S. Flights Study
conducted by Frequent Flyer Magazine and J.D. Power and Associates.
OPERATE A MODERN AND EFFICIENT FLEET.
AWA enjoys operational efficiencies due to its modern, fuel efficient
fleet. At March 31, 1997, AWA's fleet consisted of 60 Boeing 737s, 27 Airbus
A320s and 14 Boeing 757s, with an average age of approximately 10.2 years. Most
of AWA's existing aircraft are held under leases with considerable fleet plan
flexibility. As a result, in the event economic conditions change adversely, AWA
can reduce its fleet size and reduce its aircraft related financial obligations
by not renewing expiring aircraft leases.
CONTINUE TO DEVELOP PASSENGER BASE THROUGH ALLIANCES.
AWA plans to continue to employ alliance agreements to expand its passenger
base and in some cases to achieve cost savings through the reduction of
redundant labor and facilities. AWA's alliance agreements generally provide for
code-sharing arrangements and linking of frequent flyer programs, and in some
cases involve coordination of flight schedules, sharing of ticket counter space,
coordination of ground handling
7
<PAGE> 9
operations and joint purchasing and marketing efforts. AWA currently has
alliance agreements with Continental, British Airways, Northwest Airlines and
Mesa. Management believes that AWA's code-sharing activities result in increased
travel and profitability for AWA and AWA intends to pursue additional alliances
as opportunities warrant.
EXPAND LEISURE TRAVEL BUSINESSES.
The Company's strategic plan includes the expansion of its leisure tour
packaging and charter businesses which, the Company believes, present
opportunities for growth. The Company further believes that it will be
competitive in these businesses because of its low cost structure and expertise
gained in developing and managing America West Vacations and AWA's professional
and college sports chartering business. During 1997, the Company expects to
combine the America West Vacations and charter business under a separate
subsidiary of Holdings, establish a private label tour packaging business,
pursue the management of other airlines' vacation packaging businesses, expand
the scope of its vacation and charter products and introduce new package tour
destinations.
8
<PAGE> 10
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
CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Aggregate face amount......... $45,753,110 $17,026,464 $17,116,098 $14,153,323
Rating:
Moody's..................... A2 Baa2 Ba1 Ba3
Standard & Poor's........... AA- A- BBB- BB
Initial LTV Ratio
(cumulative)(1)............. 39.8% 54.7% 69.6% 81.9%
Expected principal
distribution window (in
years)...................... 0.5 - 11.0 0.5 - 8.0 0.5 - 6.5 0.5 - 4.0
Initial average life (in
years)...................... 8.7 6.7 5.0 2.0
January 2 and January 2 and January 2 and January 2 and
Regular Distribution Dates.... July 2 July 2 July 2 July 2
Final Expected Distribution
Date........................ July 2, 2008 July 2, 2005 January 2, 2004 July 2, 2001
Final Legal Distribution
Date........................ January 2, 2010 January 2, 2007 July 2, 2005 July 2, 2001
sec. 1110 protection(2)....... Yes Yes Yes Yes
3 semi-annual 3 semi-annual 3 semi-annual
interest interest interest
Liquidity Facility coverage... payments payments payments None
Initial Liquidity Facility
amount(3)................... $ $ $ 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 Aircraft Value of $114,840,000.
(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 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).
9
<PAGE> 11
EQUIPMENT NOTES AND THE AIRCRAFT
Set forth below is certain information about the Equipment Notes held in
the Trusts and the Aircraft securing such Equipment Notes:
<TABLE>
<CAPTION>
AIRCRAFT EQUIPMENT NOTES
- ------------------------------------------------------------- --------------------------------------
MANUFACTURER'S AIRCRAFT DELIVERY APPRAISED PRINCIPAL MATURITY
SERIAL NUMBER TYPE DATE(1) VALUE SERIES AMOUNT(*) DATE(*)
- -------------- --------------- -------- ------------ ------- ----------- ------------
<C> <S> <C> <C> <C> <C> <C>
66 Airbus A320-231 12/29/89 $ 28,600,000 A,B,C,D $23,512,249 July 2, 2008
67 Airbus A320-231 12/29/89 28,600,000 A,B,C,D 23,512,249 July 2, 2008
76 Airbus A320-231 12/29/89 28,820,000 A,B,C,D 23,512,249 July 2, 2008
81 Airbus A320-231 12/29/89 28,820,000 A,B,C,D 23,512,429 July 2, 2008
------------ -----------
$114,840,000 $94,048,995
============ ===========
</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 from the manufacturer were in November and
December of 1989. See "Description of the Aircraft and the Appraisals".
The appraised value of each Aircraft set forth above is based upon the
lesser of the average and median value of such Aircraft as appraised by the
following three independent appraisal and consulting firms as of the dates
indicated: BK Associates, Inc. ("BK") as of March 26, 1997, Aircraft Information
Services, Inc. ("AISI") as of March 19, 1997 and Morten Beyer and Associates
("MBA") as of March 31, 1997 (BK, AISI and MBA are collectively referred to
herein as the "Appraisers"). See "Description of the Aircraft 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 Aircraft
may be less than the appraised value thereof. In addition, the value of the
Aircraft 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 Aircraft, whether the Aircraft are 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 Aircraft 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 Aircraft" and "Description of
the Aircraft and the Appraisals".
LOAN TO AIRCRAFT VALUE RATIOS
The following table sets forth the loan to Aircraft 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 Aircraft (the
"Assumed Aggregate Aircraft 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 included in the Assumed Aggregate
Aircraft Value as of June 16, 1997 depreciates by 2% per year until the
fifteenth year after the year of delivery of such Aircraft 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
10
<PAGE> 12
occur or are appropriate for evaluating the actual future value of any Aircraft
or (ii) as to such actual future value. Many of the factors affecting the value
of the Aircraft are discussed herein under "Risk Factors -- Factors Relating to
the Certificates and the Offering -- Appraisals and Realizable Value of
Aircraft". 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 would not be
available to offset shortfalls on the Equipment Notes relating to any other
Aircraft. Therefore, upon the occurrence of an Indenture Event of Default, even
if the Aircraft as a group could be sold for more than the total amounts payable
in respect of all of the outstanding Equipment Notes, if certain Aircraft 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 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 CLASS B CLASS C
AGGREGATE CERTIFICATES CLASS A CERTIFICATES CLASS B CERTIFICATES CLASS C
EQUIPMENT POOL CERTIFICATES POOL CERTIFICATES POOL CERTIFICATES
DATE VALUE(1) BALANCE LTV BALANCE LTV BALANCE LTV
---- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
June 16, 1997........ $114,840,000 $45,753,110 39.8% $17,026,464 54.7% $17,116,098 69.6%
July 2, 1998......... 112,169,302 44,867,698 40.0 16,825,392 55.0 16,825,392 70.0
July 2, 1999......... 109,498,605 43,799,409 40.0 16,424,784 55.0 16,424,784 70.0
July 2, 2000......... 106,827,907 42,731,167 40.0 16,024,194 55.0 16,024,194 70.0
July 2, 2001......... 104,157,209 41,662,878 40.0 15,623,586 55.0 13,746,218 68.2
July 2, 2002......... 101,486,512 40,594,589 40.0 15,222,978 55.0 7,252,250 62.1
July 2, 2003......... 98,815,814 39,526,300 40.0 14,752,267 54.9 143,978 55.3
July 2, 2004......... 96,145,116 38,458,010 40.0 6,641,195 46.9 0 0.0
July 2, 2005......... 93,474,419 35,050,677 37.5 0 0.0 0 0.0
July 2, 2006......... 88,133,023 24,223,693 27.5 0 0.0 0 0.0
July 2, 2007......... 82,791,628 12,561,596 15.2 0 0.0 0 0.0
July 2, 2008......... 0 0 0.0 0 0.0 0 0.0
July 2, 2009......... 0 0 0.0 0 0.0 0 0.0
July 2, 2010......... 0 0 0.0 0 0.0 0 0.0
July 2, 2011......... 0 0 0.0 0 0.0 0 0.0
July 2, 2012......... 0 0 0.0 0 0.0 0 0.0
July 2, 2013......... 0 0 0.0 0 0.0 0 0.0
July 2, 2014......... 0 0 0.0 0 0.0 0 0.0
July 2, 2015......... 0 0 0.0 0 0.0 0 0.0
<CAPTION>
CLASS D
CERTIFICATES CLASS D
POOL CERTIFICATES
DATE BALANCE LTV
---- ------------ ------------
<S> <C> <C>
June 16, 1997........ $14,153,323 81.9%
July 2, 1998......... 9,783,305 78.7
July 2, 1999......... 5,073,025 74.6
July 2, 2000......... 1,051,953 71.0
July 2, 2001......... 0 0.0
July 2, 2002......... 0 0.0
July 2, 2003......... 0 0.0
July 2, 2004......... 0 0.0
July 2, 2005......... 0 0.0
July 2, 2006......... 0 0.0
July 2, 2007......... 0 0.0
July 2, 2008......... 0 0.0
July 2, 2009......... 0 0.0
July 2, 2010......... 0 0.0
July 2, 2011......... 0 0.0
July 2, 2012......... 0 0.0
July 2, 2013......... 0 0.0
July 2, 2014......... 0 0.0
July 2, 2015......... 0 0.0
</TABLE>
- ---------------
(1) The Assumed Aggregate Aircraft Value as of June 16, 1997 (but not the
Assumed Aggregate Aircraft Values for subsequent dates) was determined based
upon the lesser of the average and median value of all Aircraft as appraised
by the Appraisers as of the respective dates of their appraisals (see
"Description of the Aircraft and the Appraisals"). No assurance can be given
that such value represents the realizable value of the Aircraft. See "Risk
Factors -- Factors Relating to the Certificates and the
Offering -- Appraisals and Realizable Value of the Aircraft" and
"Description of the Aircraft and the Appraisals".
11
<PAGE> 13
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the offering of
the Certificates and certain cash flows.
[DIAGRAM]
- ---------------
* Each Aircraft is subject to a separate Lease and a related Indenture.
** Liquidity Facilities are only available with respect to the Class A, B and C
Certificates.
12
<PAGE> 14
THE OFFERING
Trusts: ................... Each of the Class A Trust, the Class B Trust, the
Class C Trust and the Class D Trust is to be
formed pursuant to one of the four separate Pass
Through Trust Agreements to be entered into
between AWA 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 and the
Class D Trust are the Class A Certificates, Class
B Certificates, Class C Certificates and Class D
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 four separate leveraged lease
transactions to refinance the current
indebtedness of such Owner Trustees originally
incurred to finance the Aircraft which will be
leased by such Owner Trustees to AWA, 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 Trust, 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 will be
issued in four 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 the Aircraft 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 one Certificate which may be
issued in a different denomination. See
"Description of the Certificates -- General".
13
<PAGE> 15
Regular Distribution
Dates:..................... January 2 and July 2, commencing January 2, 1998.
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,
1998. 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 and D
Certificates is January 2, 2010, January 2, 2007,
July 2, 2005 and July 2, 2001, 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 and (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 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
14
<PAGE> 16
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 AWA.
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, 1998, 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, 1998, 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 will be redeemed in
whole upon the occurrence of an Event of Loss
with respect to such Aircraft if such
Aircraft is not replaced by AWA 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, (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
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 Notes issued with respect to
such Aircraft may be purchased by the related
Owner Trustee or the beneficial owner of such
Aircraft (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
15
<PAGE> 17
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 will be secured by a perfected security
interest in the related Owner Trustee's rights in
and to such Aircraft 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 are not secured by any of the other
Aircraft 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 are in default and the
Equipment Notes issued in respect of the
remaining Aircraft are not in default, no
remedies will be exercisable under the Indentures
with respect to such remaining Aircraft. 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, AWA or Holdings, the
aggregate amounts unconditionally payable by AWA
for lease of the Aircraft 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 Aircraft. See
"Description of the Equipment Notes -- General".
(e) Section 1110
Protection:......... Milbank, Tweed, Hadley & McCloy, counsel to the
Underwriter, has advised the Indenture Trustees
that if AWA 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. 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 each
Aircraft will be subordinated in right of payment
to Series A Equipment Notes issued in respect of
such Aircraft; Series C Equipment Notes issued in
respect of such Aircraft will be subordinated in
right of payment to Series A and B Equipment
Notes issued in respect of such Aircraft; and
Series D Equipment Notes issued in respect of
such Aircraft will be subordinated in right of
payment to Series A, B and C Equipment Notes
issued in respect of such Aircraft. On each
Distribution Date, (i) payments of interest and
principal due on Series A Equipment
16
<PAGE> 18
Notes issued in respect of any Aircraft will be
made prior to payments of interest and principal
due on any Series B, C and D Equipment Notes
issued in respect of such Aircraft, (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 and D
Equipment Notes issued in respect of such
Aircraft and (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 Equipment Notes issued in
respect of such Aircraft.
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 Trust). 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 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
17
<PAGE> 19
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
AWA 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 AWA 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,
in consultation with AWA (whose recommendations
the Subordination Agent will accept), 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 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
18
<PAGE> 20
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 AWA
(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 Trust. 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 Expected
Distributions to the holders of Class D
Certificates; and (f) 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)
19
<PAGE> 21
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; and (g) to pay Adjusted
Expected Distributions to the holders of
Class D 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
(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 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
means the lower of the average or the median of
the most recent three LTV Appraisals (as defined
below) of such Aircraft. After a Triggering Event
occurs and any Equipment Note becomes a
Non-Performing Equipment
20
<PAGE> 22
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 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).
"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 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
and (ii) the outstanding principal amount of the
Equipment Notes secured by such Aircraft 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 39.8%, for the Class B Certificates
54.7%, for the Class C Certificates 69.6% and for
the Class D Certificates 81.9%.
(b) Intercreditor
Rights:.................... Pursuant to the Intercreditor Agreement, the
Trustees and the Liquidity Provider will 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 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 Aircraft securing
such Equipment Notes), by the Controlling Party.
"Controlling Party" with respect to any Indenture
means: (w) the Class A Trustee; (x) upon payment
of Final Distributions to the holders of Class A
Certificates, the Class B Trustee; (y) upon
payment of Final Distributions to the holders of
Class B Certificates, the Class C Trustee; and
(z) upon payment of Final Distributions to the
holders of Class C Certificates, the Class D
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
21
<PAGE> 23
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 AWA, without the consent of
each Trustee, (a) no Aircraft 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 or such Equipment
Notes, and (b) the amount and payment dates
of rentals payable by AWA under the Lease for
such Aircraft 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 AWA 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.
"Minimum Sale Price" means, with respect to the
Aircraft or the Equipment Notes issued in respect
of such Aircraft, at any time, the lesser of (a)
75% of the Appraised Current Market Value of such
Aircraft 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 Aircraft.
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 Aircraft, 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
22
<PAGE> 24
the Aircraft. Neither AWA nor Holdings will
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.
Indenture Trustee: ........ The Chase Manhattan Bank will act as Indenture
Trustee with respect to the issue of Equipment
Notes relating to each of the Aircraft.
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 or D 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 or D Certificate, 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. 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
------------ ------- ----------
<C> <C> <C>
Class A A2 AA-
Class B Baa2 A-
Class C Ba1 BBB-
Class D Ba3 BB
</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
23
<PAGE> 25
of such Rating Agency, circumstances (including
the downgrading of AWA 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.
24
<PAGE> 26
SUMMARY FINANCIAL AND OPERATING DATA
The following table summarizes certain financial and operating data with
respect to AWA 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, 1995 and 1996 and March 31,
1996 and 1997 reflect the adoption by AWA of fresh start reporting upon
consummation of AWA's reorganization and are not prepared on a basis of
accounting consistent with prior data. References to "Predecessor Company" refer
to AWA's operations prior to its emergence from bankruptcy and references to
"Reorganized Company" refer to AWA'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)
THREE MONTHS ENDED YEAR ENDED ---------------------------
MARCH 31, DECEMBER 31, AUGUST 26 TO JANUARY 1 TO YEAR ENDED
----------------------- ----------------------- DECEMBER 31, AUGUST 25, DECEMBER 31,
1997 1996 1996 1995 1994 1994 1993
---------- ---------- ---------- ---------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Operating revenues........ $ 462,187 $ 413,150 $1,739,526 $1,550,642 $ 469,766 $ 939,028 $1,325,364
Operating income.......... 33,463 34,318 68,666(2) 154,732(3) 38,871 107,506 121,054
Income (loss) before
income taxes and
extraordinary items..... 25,918 25,420 34,493 108,378 19,736 (201,209) 37,924
Income (loss) before
extraordinary items..... 13,944 13,727 9,610 54,770 7,846 (203,268) 37,165
Extraordinary gain
(loss)(4)............... -- -- (1,105) (984) -- 257,660 --
Net income................ 13,944 13,727 8,505 53,786 7,846 54,392 37,165
BALANCE SHEET DATA (AT END
OF PERIOD):
Working capital
deficiency.............. $ (188,483) $ (75,785) $ (170,907) $ (70,416) $ (47,927) $ (163,572) $ (124,375)
Total assets.............. 1,602,082 1,651,928 1,597,677 1,588,709 1,545,092 -- 1,016,743
Long-term debt, less
current maturities(5)... 333,685 371,588 330,148 373,964 465,598 -- 620,992
Total stockholder's equity
(deficiency)............ 623,382 667,155 622,780 649,472 595,446 -- (254,262)
OPERATING DATA:
Available seat miles (in
millions)............... 5,791 4,955 21,625 19,421 6,424 11,636 17,190
Revenue passenger miles
(in millions)........... 3,982 3,504 15,321 13,313 3,972 8,261 11,221
Passenger load factor
(%)..................... 68.8 70.7 70.9 68.5 61.8 71.0 65.3
Yield per revenue
passenger mile
(cents)................. 10.94 11.07 10.69 10.91 11.02 10.68 11.11
Passenger revenue per
available seat mile
(cents)................. 7.52 7.83 7.57 7.48 6.81 7.58 7.25
Operating cost per
available seat mile
(cents)................. 7.40 7.65 7.73(2) 7.19(3) 6.71 7.15 7.01
Full time equivalent
employees (at end of
period)................. 10,015 8,933 9,652 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) Reflects a $65.1 million nonrecurring special charge related to AWA'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. The special charge
increased cost per available seat mile by .30 cents for the year ended
December 31, 1996.
(3) Costs associated with AWA's outsourcing of its heavy aircraft maintenance
resulted in a pretax restructuring charge of approximately $10.5 million
and an increase in cost per available seat mile of .05 cents for the year
ended December 31, 1995.
(4) Includes (i) an extraordinary loss of $1.1 million in 1996 relating to
prepayment of the 10 3/4% Notes, (ii) an extraordinary loss of $984,000 in
1995 resulting from the exchange of debt by AWA 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 AWA's plan of reorganization.
(5) Includes certain balances reported as "Estimated Liabilities Subject to
Chapter 11 Proceedings" for the Predecessor Company.
25
<PAGE> 27
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE CERTIFICATES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND SHOULD PARTICULARLY
CONSIDER THE FOLLOWING MATTERS:
AWA AND 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 AWA's markets are highly competitive and are served by larger
carriers with substantially greater financial resources than AWA. A number of
AWA's larger competitors have proprietary reservation systems providing them
with certain competitive advantages. 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 AWA's routes, as well as increased
competition from or the introduction of new services by established carriers,
could negatively impact AWA's results of operations. See
"Business -- Competition and Marketing".
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 AWA's operating results.
LEVERAGE; FUTURE CAPITAL REQUIREMENTS
At March 31, 1997, AWA had $377.9 million of long-term indebtedness
(including current maturities). AWA does not have available lines of credit or
significant unencumbered assets and thus may be less able than certain of its
competitors to withstand adverse industry conditions or a prolonged economic
recession. In addition, at March 31, 1997, AWA had firm commitments for a total
of 17 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, AWA estimates such aggregate net cost to be approximately $850
million. AWA 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 AWA will be able to obtain such capital in sufficient amounts or on
acceptable terms. AWA is presently negotiating to expand such arrangement from
17 to 22 firm orders for new aircraft, obtain financing support for 16 of the 22
firm orders and improve financing terms and conditions under which aircraft
would be purchased.
LABOR RELATIONS
There have been numerous attempts by unions to organize the employees of
AWA, and AWA expects such organization efforts to continue in the future.
Several groups of AWA's employees have selected their respective collective
bargaining representatives and negotiations are in progress. AWA cannot predict
which, if any, other employee groups may seek union representation or the
outcome or the terms of any future collective bargaining agreement and therefore
the effect, if any, on AWA's operations or financial condition. See
"Business -- Labor Relations".
26
<PAGE> 28
CONCENTRATION OF VOTING POWER, INFLUENCE OF CERTAIN PRINCIPAL STOCKHOLDERS
TPG Partners, L.P. ("TPG Partners ") TPG Parallel I, L.P. ("TPG
Parallel "), Air Partners II, L.P. ("Air Partners " and together with TPG
Partners and TPG Parallel, "TPG "), Continental and Mesa collectively control
approximately 60.5% of the total voting power of Holdings and are subject to the
terms of a stockholders' agreement, which provides for certain voting
restrictions until the first annual meeting of stockholders of Holdings held
after August 25, 1997. As a result, these stockholders are able to elect a
majority of their designees to the Board of Directors and otherwise control the
Company. Mesa and Continental are engaged in the airline industry and are
parties to alliance agreements with AWA. Each of TPG Partners, TPG Parallel and
Air Partners is controlled by TPG Advisors, Inc., a Delaware corporation whose
executive officers and directors, through their positions in Air Partners, L.P.,
a significant shareholder of Continental, may be deemed to own beneficially a
significant percentage of Continental's common stock. Larry L. Risley, a
director of each of Holdings and AWA, is the chairman and chief executive
officer of Mesa. There can be no assurance that the controlling stockholders
identified above will not seek to influence the Company in a manner that would
favor their own personal interests over the interests of the Company.
AIRCRAFT FUEL
Aircraft fuel costs constituted approximately 14% of AWA's total operating
expenses during 1996. At current consumption levels, a one cent per gallon
change in the price of jet fuel would affect AWA's annual operating results by
approximately $3.5 million. Accordingly, a substantial increase in the price of
jet fuel or the lack of adequate fuel supplies in the future would have a
material adverse effect on AWA's operating results. AWA's performance during
1996 was adversely affected by the price of jet fuel. The average price of jet
fuel purchased by AWA during 1996 was 66.49 cents per gallon or 19.1% higher
than the average price paid by AWA in 1995. Those price increases were largely
responsible for AWA's 1996 jet fuel expense exceeding that incurred in 1995 by
$59.3 million or 34.1%. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
AWA purchases its fuel from petroleum refiners and suppliers on standard
trade terms under master agreements. Although AWA is currently able to obtain
adequate supplies of jet fuel, future supplies and price trends may change as a
result of geopolitical developments, regional production patterns, environmental
concerns and other unpredictable events.
In 1996, AWA implemented a fuel hedging program to manage the risk from
fluctuating jet fuel prices. The program's objectives are to provide some
protection against extreme, upward movements in the price of jet fuel and to
protect AWA's ability to meet its annual fuel expense budget. Under the program,
AWA may enter into certain cap and swap transactions with approved
counterparties for a period not to exceed twelve months. This program will
primarily address AWA's exposure associated with its United States East Coast
fuel requirements, which correlate well with risk management vehicles having
reasonable market liquidity.
Due to the scope and nature of AWA's route system, AWA purchases a
substantially greater share of jet fuel on the United States West Coast than its
larger competitors. West Coast jet fuel prices tend to be more volatile than jet
fuel prices in other domestic markets. Further, the propensity of West Coast jet
fuel prices to move independently from the other United States jet fuel markets
renders many conventional hedging techniques ineffective in managing this
portion of AWA's jet fuel price risk.
FAA FUNDING
The federal air transportation excise taxes, which expired December 31,
1996, have been reenacted effective March 7, 1997 through September 30, 1997.
Such taxes (a 10% ticket tax, a 6.25% air cargo tax and a $6.00 international
departure tax) generate a substantial portion of funding for the Federal
Aviation Administration ("FAA"). A coalition of the seven largest U.S. airlines
is proposing a user fee as a replacement for the excise taxes. A fuel tax is
also being considered. The National Aviation Civilian Review Commission (the
"Review Commission") has announced its intention to conduct an independent
review of possible funding mechanisms to replace the excise taxes and is
scheduled to release a report in September 1997. Implementation by Congress of a
user fee as proposed by the seven airlines, which would favor AWA's larger
27
<PAGE> 29
competitors, or other proposals recommended by the Review Commission, could
significantly increase the cost of AWA's airline operations and could have a
material adverse impact on AWA's operating results. See "Business -- Government
Regulations -- FAA Funding".
SECURITY AND SAFETY MEASURES
Congress recently adopted increased safety and security measures designed
to increase airline passenger security and protect against terrorist acts. Such
measures have resulted in additional operating costs to the airline industry. A
report of the President's Commission on Aviation Safety and Security (the
"Aviation Safety Commission") recommends the adoption of further measures aimed
at improving the safety and security of air travel. AWA 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 -- Additional Security and
Safety Measures".
OTHER REGULATORY MATTERS
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 March 31, 1997, 20 of AWA's 101 aircraft did not meet the FAA's
Stage III noise reduction requirements and must be retired or significantly
modified prior to the year 2000. These modifications may require substantial
capital expenditures. There can be no assurance that AWA will be able to obtain
financing for such capital expenditures or, if such financing is obtained that
it will be on terms that are favorable or acceptable to AWA. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".
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.
AWA 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 AWA. See "Business -- Government Regulations".
SUBSTANTIAL RESTRICTIONS AND COVENANTS
Certain loan agreements and debt instruments of AWA contain significant
operating and financial restrictions on AWA. The terms of such agreements and
instruments affect, and in many cases significantly limit or prohibit, among
other things, the ability of AWA to repay indebtedness prior to its stated
maturity, sell assets or engage in mergers or acquisitions. In addition, under
certain of such agreements and instruments, AWA is required to maintain
specified levels of stockholder's equity and adjusted cash and maintain certain
specified financial ratios. While AWA is currently in compliance with these
restrictions and requirements, such restrictions and requirements could also
limit the ability of AWA to effect future financings, make needed capital
expenditures, withstand a future downturn in AWA's business or the economy in
general or otherwise conduct necessary corporate activities. A failure by AWA to
comply with these restrictions and requirements could lead to a default under
the terms of such indebtedness. In the event of default, the holders of such
indebtedness could elect to declare all of the funds borrowed pursuant thereto
due and payable together with accrued and unpaid interest. In such event, there
can be no assurance that AWA would be able to make such payments or borrow
sufficient funds from alternative sources to make such payments. Even if
additional financing could be obtained, there can be no assurance that it would
be on terms that are favorable or acceptable to AWA.
In the event of certain changes of control, with respect to Holdings or
AWA, AWA will be required to offer to purchase certain amounts of the
indebtedness referred to above, in each case subject to certain conditions.
There can be no assurance that AWA will be able to raise sufficient funds to
meet its obligations in connection with such a change of control. In addition,
in the event of certain asset dispositions, AWA will be
28
<PAGE> 30
required under certain circumstances to use the excess proceeds to offer to
purchase certain amounts of such indebtedness.
FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
APPRAISALS AND REALIZABLE VALUE OF THE AIRCRAFT
The appraised value of each Aircraft is based upon the lesser of the
average and median value of such Aircraft 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.
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
Aircraft may be less than the appraised value thereof. In addition, the value of
the Aircraft 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 Aircraft, whether the Aircraft 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 Aircraft 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
Aircraft and the Appraisals -- Appraised Value".
The Equipment Notes are not cross-collateralized and, consequently,
liquidation proceeds from the sale of the Aircraft in excess of the amounts due
on Equipment Notes related to such Aircraft will not be available to offset
shortfalls, 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; and (f) 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 Distributions
to the holders of Class C Certificates; and (g) to pay Adjusted Expected
Distributions to the holders of Class D 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
29
<PAGE> 31
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 Aircraft
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 earlier of (i) the acceleration of the Equipment
Notes and (ii) a Final Drawing under the Liquidity Facilities, 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 AWA, 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 AWA, without the consent of
each Trustee, (a) no Aircraft 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 or such Equipment Notes, and (b)
the amount and payment dates of rentals payable by AWA under the Lease for such
Aircraft 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 AWA 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.
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 and the Class
D
30
<PAGE> 32
Certificates be rated Ba3 by Moody's and BB 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 AWA
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
Certificates), the collateral value provided by the Aircraft 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 and of the Class D Certificates to the Class C
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 Hong Kong Cross-Border Lease
financings, in which case AWA may not permit such Aircraft to be used, operated
or maintained in Hong Kong or the People's Republic of China, the Leases do not
contain general geographic restrictions on AWA's (or any Permitted Sublessee's)
ability to operate the Aircraft. Although AWA has no current intention to do so,
AWA is permitted, upon compliance with the Leases and the Refunding Agreements,
to sublease the Aircraft 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 Aircraft, it may be difficult, expensive and
time-consuming to obtain possession of such Aircraft, particularly when such
Aircraft 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 Aircraft 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 Aircraft than the lien
of the related Indenture. These factors could limit the benefits of the security
interest in the Aircraft.
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 AWA'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.
CROSS-BORDER LEASES
Three Aircraft securing the obligations under the related Indentures are
subject to Hong Kong Cross-Border Lease financings with terms expiring in 2006.
Under the terms of each of the Cross-Border Lease financings, title to the
relevant Aircraft is held by the relevant Owner Trustee as assignee of the title
holder of the Aircraft, which, under a hire purchase agreement, has been hired
by the original title holder to a Hong Kong entity acting as the Cross-Border
Lessor of such Aircraft. In summary, the Hong Kong lease financing documentation
provides that, subject to various terms
31
<PAGE> 33
and conditions, the Cross-Border Lessor has the right to acquire title to the
Aircraft from the relevant Owner Trustee upon the termination of the hire
purchase agreement. The relevant documents further provide that the relevant
Owner Trustee, as assignee of the Cross-Border Lessee, in each of the Hong Kong
transactions can concurrently re-acquire title to the relevant Aircraft from the
Cross-Border Lessor, if such lessor exercises its option to acquire title to the
Aircraft upon the termination of the hire purchase agreement, or the Owner
Trustee, as assignee of the title holder of the Aircraft, can retain title if
the Cross-Border Lessor does not or cannot exercise its option to acquire the
Aircraft upon termination of the hire purchase agreement. 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 the financing, the
Owner Trustee, as assignee of the Cross-Border Lessee, has the right to cause
the termination of such cross-border financing upon the occurrence and
continuance of a Lease Event of Default under the related U.S. Lease and the
exercise of remedies under the U.S. Lease (to the extent not stayed). By virtue
of an agreed defeasance arrangement, the monetary obligations of the
Cross-Border Lessees under the Hong Kong Cross-Border Leases have been assumed
by certain financial institutions or other parties. The relevant Owner Trustee's
right to take title to the Aircraft free of the Cross-Border Lease financing is
not conditioned upon the payment of any sum by any such parties. In addition,
the relevant Cross-Border Lessor and the partners therein have expressly agreed
that, after giving effect to the provisions of the Cross-Border Lease financing
documentation, they shall not have any right to retain or assert any interest in
the relevant Aircraft upon the termination of the relevant Cross-Border Lease
financing.
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 partner therein
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 partner therein, 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 clearing of title to such Aircraft
free of the Cross-Border Lease financing 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 Hong Kong and English counsel (based on certain
assumptions and qualifications) will be given to the effect that upon the
occurrence of an insolvency, bankruptcy, liquidation or any other similar event
with respect to the Cross-Border Lessor or any partner therein, neither the
Cross-Border Lessor nor any partner therein nor any trustee in bankruptcy,
liquidator, receiver or any other similar official in relation to the
Cross-Border Lessor or any partner therein would be entitled to acquire and
retain title to the relevant Aircraft. 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 Hong Kong or England would
not find differently, that such opinions would prove to be correct or that the
law of another jurisdiction would not apply. In this regard, Hong Kong counsel
advises that the Sino-British Joint Declaration on the future of Hong Kong
provides that the laws of Hong Kong in force on June 30, 1997 will be maintained
except for laws that contravene the Basic Law of the Special Administrative
Region of the People's Republic of China which comes into effect in Hong Kong on
July 1, 1997 (the "Basic Law"). Hong Kong counsel will be giving an opinion
that, in their view, the Basic Law does not contain any provisions which would
be contravened by any provision of Hong Kong law relevant to their opinion
referred to above, but that this is a matter for interpretation by the Standing
Committee of the National People's Congress of the People's Republic of China,
in which the power of interpretation of the Basic Law is vested.
In connection with the realization by the Indenture Trustee of its security
interest in an Aircraft subject to a Cross-Border Lease Financing, it may be
desirable to have the related Cross-Border Leases terminated.
The information set forth above regarding Cross-Border Lease financings was
provided by GPA Group plc ("GPA") and AWA takes no responsibility for the
accuracy thereof.
32
<PAGE> 34
MAINTENANCE
AWA is responsible for the maintenance, service, repair and overhaul of the
Aircraft to the extent described in the Leases. The failure of AWA (or any
Permitted Sublessee (as defined herein)) to maintain, service, repair or
overhaul adequately an Aircraft may adversely affect the value of such Aircraft
and thus, upon a disposition of the Aircraft, 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 AWA 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 AWA (or any
Permitted Sublessee) with its obligations under the Lease to maintain, service,
repair or overhaul adequately the Aircraft, the value of the Aircraft may
deteriorate. Such a deterioration in the value of the Aircraft would not, in and
of itself, constitute a breach by AWA of its obligations under the Leases. See
"Description of the Equipment Notes -- The Leases".
INSURANCE
AWA is responsible for the maintenance of public liability, property damage
and all-risk aircraft hull insurance on the Aircraft to the extent described in
the Leases. The failure of AWA to adequately insure the Aircraft 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, AWA 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 Underwriter has advised AWA that the Underwriter currently
intends to make a market in the Certificates as permitted by applicable law. The
Underwriter, however, is not obligated to make a market in the Certificates and
any such market-making may be discontinued at any time at the sole discretion of
the Underwriter. Accordingly, no assurance can be given as to the development or
liquidity of any market for the Certificates.
33
<PAGE> 35
USE OF PROCEEDS
The Certificates are being issued in connection with four 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. Such indebtedness bore interest at a weighted average rate per
annum of approximately % as of , and matures at
various dates between and . Neither AWA nor Holdings will 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 $ 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 Aircraft. 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 any
proceeds remaining after such repayment may be used to pay certain costs and
expenses of the Original Lessee, such as break-funding costs and redemption
premiums, incurred in the refinancing and which would otherwise be borne
directly by the Original Lessee (as defined below).
When originally acquired, the Aircraft were delivered directly to a
U.S.-domiciled subsidiary of GPA. The Aircraft were leased from the Owner
Trustees to such subsidiary as original lessee (the "Original Lessee") and
sublessor. After a period of storage the Aircraft were, in September 1990,
subleased by the Original Lessee to AWA. See "Certain Transactions". In
addition, three of these Aircraft at the time of lease to the Original Lessee
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, the Original
Lessee's interests under leases between the Owner Trustees and the Original
Lessee, as lessee, are being assigned to AWA and the leases will be amended and
restated as leases between the Owner Trustees and AWA, with the 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
AWA 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>
REORGANIZED COMPANY PREDECESSOR COMPANY
-------------------------------------------- ----------------------------
THREE MONTHS
ENDED YEAR ENDED PERIOD FROM PERIOD FROM YEAR ENDED
MARCH 31, DECEMBER 31, AUGUST 26 TO JANUARY 1 TO DECEMBER 31,
------------- ------------- DECEMBER 31, AUGUST 25, -------------
1997 1996 1996 1995 1994 1994 1993 1992
----- ----- ----- ----- ------------ ------------ ----- -----
<C> <C> <C> <C> <C> <C> <C> <C>
1.69 1.71 1.22 1.73 1.38 * 1.28 *
</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
capitalized interest. For the period ended August 25, 1994, earnings were
insufficient to cover fixed charges by $201.2 million. For the year ended
December 31, 1992, earnings were insufficient to cover fixed charges by $131.8
million.
34
<PAGE> 36
CAPITALIZATION
The following table sets forth the capitalization of AWA at March 31, 1997.
The table should be read in conjunction with AWA'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>
MARCH 31,
1997
--------------
(IN THOUSANDS)
<S> <C>
Long-term debt, including current maturities................ $ 377,896
Stockholder's equity:
Common Stock (1,000 shares authorized and 1,000 shares
issued and outstanding)................................ --
Additional paid-in capital.................................. 539,301
Retained earnings........................................... 84,081
----------
Total stockholder's equity................................ 623,382
----------
Total capitalization........................................ $1,001,278
==========
</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 years ended
December 31, 1996 and 1995, the period August 26, 1994 through December 31,
1994, the period January 1, 1994 to August 25, 1994, and each of the years in
the two-year period ended December 31, 1993, are derived from the financial
statements of AWA, which financial statements have been audited by KPMG Peat
Marwick LLP, independent certified public accountants and (ii) the periods ended
March 31, 1997 and 1996 are derived from the unaudited condensed financial
statements of AWA. 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 balance sheets as of December 31,
1996 and 1995, and the related statements of income, cash flows and
stockholder's equity for the years ended December 31, 1996 and 1995, the period
August 26, 1994 through December 31, 1994, and the period January 1, 1994
through August 25, 1994, and the report thereon, are included elsewhere in this
prospectus. The independent auditors' report as of and for the years ended
December 31, 1996 and 1995, the period August 26, 1994 through December 31,
1994, and the period January 1, 1994 through August 25, 1994 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.
<TABLE>
<CAPTION>
REORGANIZED COMPANY
----------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31, AUGUST 26 TO
----------------------- ----------------------- DECEMBER 31,
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS EXCEPT OPERATING DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Operating revenues............ $ 462,187 $ 413,150 $1,739,526 $1,550,642 $ 469,766
Operating income.............. 33,463 34,318 68,666(2) 154,732(3) 38,871
Income (loss) before income
taxes and extraordinary
items....................... 25,918 25,420 34,493 108,378 19,736
Income (loss) before
extraordinary items......... 13,944 13,727 9,610 54,770 7,846
Extraordinary gain
(loss)(4)................... -- -- (1,105) (984) --
Net income.................... 13,944 13,727 8,505 53,786 7,846
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital deficiency.... $ (188,483) $ (75,785) $ (170,907) $ (70,416) $ (47,927)
Total assets.................. 1,602,082 1,651,928 1,597,677 1,588,709 1,545,092
Long-term debt, less current
maturities(5)............... 333,685 371,588 330,148 373,964 465,598
Total stockholder's equity
(deficiency)................ 623,382 667,155 622,780 649,472 595,446
OPERATING DATA:
Available seat miles (in
millions)................... 5,791 4,955 21,625 19,421 6,424
Revenue passenger miles (in
millions)................... 3,982 3,504 15,321 13,313 3,972
Passenger load factor (%)..... 68.8 70.7 70.9 68.5 61.8
Yield per revenue passenger
mile (cents)................ 10.94 11.07 10.69 10.91 11.02
Passenger revenue per
available seat mile
(cents)..................... 7.52 7.83 7.57 7.48 6.81
Operating cost per available
seat mile (cents)........... 7.40 7.65 7.73(2) 7.19(3) 6.71
Full time equivalent employees
(at end of period).......... 10,015 8,933 9,652 8,712 10,715
<CAPTION>
PREDECESSOR COMPANY(1)
----------------------------------------
YEAR ENDED
JANUARY 1 TO DECEMBER 31,
AUGUST 25, -------------------------
1994 1993 1992
------------ ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT OPERATING DATA)
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Operating revenues............ $ 939,028 $1,325,364 $1,294,140
Operating income.............. 107,506 121,054 (74,812)
Income (loss) before income
taxes and extraordinary
items....................... (201,209) 37,924 (131,761)
Income (loss) before
extraordinary items......... (203,268) 37,165 (131,761)
Extraordinary gain
(loss)(4)................... 257,660 -- --
Net income.................... 54,392 37,165 (131,761)
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital deficiency.... $(163,572) $ (124,375) $ (201,567)
Total assets.................. -- 1,016,743 1,036,441
Long-term debt, less current
maturities(5)............... -- 620,992 647,015
Total stockholder's equity
(deficiency)................ -- (254,262) (294,613)
OPERATING DATA:
Available seat miles (in
millions)................... 11,636 17,190 19,271
Revenue passenger miles (in
millions)................... 8,261 11,221 11,781
Passenger load factor (%)..... 71.0 65.3 61.1
Yield per revenue passenger
mile (cents)................ 10.68 11.11 10.31
Passenger revenue per
available seat mile
(cents)..................... 7.58 7.25 6.30
Operating cost per available
seat mile (cents)........... 7.15 7.01 7.10
Full time equivalent employees
(at end of period).......... 10,849 10,544 10,233
</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 and $16.2 million for the years ended December 31,
1993 and 1992, respectively.
(2) Reflects a $65.1 million nonrecurring special charge related to AWA'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. The special charge
increased cost per available seat mile by .30 cents for the year ended
December 31, 1996.
(3) Costs associated with AWA's outsourcing of its heavy aircraft maintenance
resulted in a pretax restructuring charge of approximately $10.5 million and
an increase in cost per available seat mile of .05 cents for the year ended
December 31, 1995.
(4) Includes (i) an extraordinary loss of $1.1 million in 1996 relating to
prepayment of the 10 3/4% Notes, (ii) an extraordinary loss of $984,000 in
1995 resulting from the exchange of debt by AWA 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) Includes certain balances reported as "Estimated Liabilities Subject to
Chapter 11 Proceedings" for the Predecessor Company.
36
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company adopted a holding company structure effective midnight December
31, 1996 when Holdings became the parent company of AWA. Management believes the
holding company structure improves the Company's ability to manage separate
business segments effectively and that the holding company provides a platform
for further expansion of the Company's businesses, including its leisure travel
businesses. The Company intends to continue to evaluate investment and expansion
opportunities which allow the Company to capitalize on its key strengths and
market position.
1996 IN REVIEW
In 1996, AWA had net income of $8.5 million. The 1996 earnings included a
$65.1 million pretax nonrecurring special charge resulting from AWA's decisions
to order certain new aircraft and cancel a prior order, and to make certain
other related adjustments (See Note 12, "Restructuring and Other Nonrecurring
Special Charges" in Notes to Financial Statements). Excluding this charge, net
income for the year was $48.7 million. Excluding the special charge, these
results reflected one of the best years in the airline's history. Another
measure AWA uses to evaluate its financial performance is EBITDAR (operating
income before depreciation, amortization, rent and nonrecurring charges). AWA's
EBITDAR margin for 1996 was 28.3% which AWA believes was the highest EBITDAR
margin among the major U.S. airlines.
For the first six months of 1996, AWA posted record results. Net income
before extraordinary item for that period was $43.2 million, an increase of
65.8% over the first half of 1995. Revenues rose to $877.1 million, due in part
to the growth plan announced in September 1995, which increased capacity by
8.6%, a 13.8% increase in passenger traffic and solid passenger revenue yields.
Higher year-over-year operating costs, primarily from higher fuel and passenger
traffic related expenses, were more than offset by the favorable revenue
performance.
In the third quarter, AWA experienced a setback in the 1996 trend of record
results with a net loss of $45.7 million, which included the $65.1 million
nonrecurring special charge discussed above. The decline in earnings resulted
from a number of factors, including the $65.1 million charge, lower yields
caused by untimely revenue decisions made in June and July 1996, high jet fuel
prices and operating dependability difficulties encountered during the summer of
1996. AWA took action to address these problems as follows:
REVENUE MANAGEMENT
- Established a full time revenue recovery team led by senior management,
to review and address the problems that led to poor revenue management
decisions.
- Increased staffing of and upgraded the revenue management team.
- Conducted a market-by-market review and addressed pricing/yield issues.
- Implemented policies and procedures to enhance controls over the revenue
management process.
- Committed to $7.3 million in spending for new revenue management systems.
FUEL COST
- Established a hedging program to manage AWA's exposure to fluctuating
fuel prices.
OPERATIONS
- Initiated Get The Product Right . . . Together, a comprehensive program
designed to improve operational and customer service performance,
including increasing the airline's maintenance workforce, adding two
additional overnight maintenance stations and increasing reservations
staffing and technology.
37
<PAGE> 39
- Implemented a structured "work out process" whereby teams of front-line
employees develop solutions to operational problems.
- Authorized the acquisition of an additional spare aircraft.
The fourth quarter of 1996 saw a return to record profitability with pretax
earnings of $16.8 million. Net income for the quarter was $12.1 million.
Bolstered by a record 69.1% load factor, revenues for the fourth quarter were a
record $439.9 million, an 11% improvement over 1995. Operating cost per
available seat mile ("CASM") (excluding special charges) decreased 2.6% from
7.38 cents per ASM in the fourth quarter of 1995 to 7.19 cents per ASM in the
1996 fourth quarter, despite a 23.1% increase in the average price of fuel
consumed. Operational reliability also showed marked improvement as the
percentage of scheduled aircraft miles completed averaged more than 98% in the
1996 fourth quarter as compared to a low of 96% in the third quarter of 1996.
SELECTED OPERATING DATA
The table below sets forth selected operating data for AWA. The data for
the year ended December 31, 1994 is on a combined basis for the Reorganized and
Predecessor Company.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------- --------------------------------------------------
PERCENT COMBINED PERCENT PERCENT
CHANGE BASIS CHANGE CHANGE
1997 1996 1997-1996 1996 1995 1994 1996-1995 1995-1994
----- ----- --------- ------ ------ -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available seat miles (in millions)..... 5,791 4,955 16.9 21,625 19,421 18,060 11.3 7.5
Revenue passenger miles (in
millions)............................ 3,982 3,504 13.6 15,321 13,313 12,233 15.1 8.8
Load factor (percent).................. 68.8 70.7 (2.7) 70.9 68.5 67.7 3.5 1.2
Yield per revenue passenger mile
(cents).............................. 10.94 11.07 (1.2) 10.69 10.91 10.79 (2.0) 1.1
Revenue per available seat mile
Passenger (cents).................... 7.52 7.83 (4.0) 7.57 7.48 7.31 1.2 2.3
Total (cents)........................ 7.98 8.34 (4.3) 8.04 7.98 7.80 0.8 2.3
Passenger enplanements (in
thousands)........................... 4,590 4,305 6.6 18,178 16,848 15,669 7.9 7.5
Average stage length (miles)........... 768 700 9.7 732 686 676 6.7 1.5
Average passenger journey (miles)...... 1,088 968 12.4 1,042 986 979 5.7 0.7
Average daily aircraft utilization
(hours).............................. 12.4 11.5 7.8 11.8 11.4 11.2 3.5 1.8
Aircraft (end of period)............... 101 95 6.3 101 93 87 8.6 6.9
Full time equivalent employees (end of
period).............................. 10,015 8,933 12.1 9,652 8,712 10,715 10.8 (18.7)
</TABLE>
38
<PAGE> 40
The table below sets forth the major components of operating expense per
ASM for AWA 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.
(See Note 1, "Summary of Significant Accounting Policies -- (a) Basis of
Presentation" in Notes to Financial Statements).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ----------------------------------------------------------
PERCENT COMBINED PERCENT PERCENT
CHANGE BASIS CHANGE CHANGE
1997 1996 1997-1996 1996 1995 1994 1996-1995 1995-1994
---- ---- --------- ---------- ---------- -------- --------- ---------
(IN CENTS) (IN CENTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and related costs............ 1.74 1.91 (8.9) 1.78 1.97 1.83 (9.6) 7.7
Aircraft rents........................ .95 .95 -- .94 .89 .89 5.6 --
Other rents and landing fees.......... .53 .54 (1.9) .52 .56 .58 (7.1) (3.4)
Aircraft fuel......................... 1.19 .99 20.2 1.08 .90 .88 20.0 2.3
Agency commissions.................... .66 .66 -- .62 .64 .64 (3.1) --
Aircraft maintenance materials and
repairs............................. .54 .55 (1.8) .58 .34 .25 70.6 36.0
Depreciation and amortization......... .21 .27 (22.2) .24 .25 .40 (4.0) (37.5)
Amortization of reorganization value
in excess of amounts allocable to
identifiable assets................. .11 .13 (15.4) .12 .17 .07 (29.4) nm
Restructuring charges and other
nonrecurring special charges........ -- -- -- .30 .05 -- nm nm
Other................................. 1.47 1.65 (10.9) 1.55 1.42 1.45 9.2 (2.1)
---- ---- --- --- ---
7.40 7.65 (3.3) 7.73 7.19 6.99 7.5 2.9
==== ==== === === ===
</TABLE>
- ---------------
nm -- not meaningful.
RESULTS OF OPERATIONS
AWA'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. In recent periods, airlines
have achieved generally improved operating results as a result of more favorable
economic conditions and as a result of focusing on their areas of relative
strength, eliminating service to under-performing markets and rationalizing
operations, route systems and pricing strategies.
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, international events, fuel prices and
general economic conditions.
The following discussion provides an analysis of AWA's results of
operations and reasons for material changes therein for the (i) three month
periods ended March 31, 1997 and 1996 and (ii) years ended December 31, 1996 and
1995, and the combined periods from January 1 through August 25, 1994, when AWA
completed its reorganization and emerged from bankruptcy protection, and August
26 through December 31, 1994. AWA'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 AWA's emergence from
bankruptcy.
IMPACT OF FRESH START REPORTING
In connection with its emergence from bankruptcy in August 1994, AWA
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 AWA's statements of income including the
financial statement accounting for
39
<PAGE> 41
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 AWA 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 AWA's assets and liabilities
to fair market values, have had and will have a significant effect on AWA's
statements of income. The more significant adjustments relate to (i) reduced
rent expense due to the revaluation 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 revaluation 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 revaluation 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%.
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
For the three months ended March 31, 1997 and 1996, AWA realized net income
of $13.9 million and $13.7 million, respectively. Net income for the three month
period in 1997 included income tax expense for financial reporting purposes of
$12.0 million compared to $11.7 million in 1996. AWA's results of operations for
interim periods are not necessarily indicative of such results for an entire
year due to seasonal factors as well as competitive and general economic
conditions.
Passenger revenues increased $47.7 million or 12.3% to $435.5 million
during the three months ended March 31, 1997 due primarily to a 13.6% increase
in revenue passenger miles. Yield decreased 1.2% to 10.94 cents from 11.07 cents
due primarily to a 9.7% increase in stage length. Capacity, as measured in ASMs,
increased 16.9% in the 1997 first quarter as compared to 1996 due to the effect
of AWA's strategic growth plan which was initiated in February 1996. Load factor
decreased by 1.9 points to 68.8%. Passenger revenue per available seat mile
("RASM") decreased to 7.52 cents from 7.83 cents. Cargo and other revenues
increased 5.1% to $26.6 million for the first quarter of 1997 as a result of
higher available capacity.
CASM decreased 3.3% to 7.40 cents in the first quarter of 1997 from 7.65
cents for the 1996 period, despite a 24.7% increase in the average price per
gallon of fuel. Excluding fuel and related taxes, CASM declined 6.7% when
compared with the first quarter of 1996. The changes in the components of
operating expense per ASM are explained as follows:
- Salaries and related costs per ASM decreased 8.9% due to continued
improvement in productivity as full-time equivalent headcount increased
12.1% versus a 16.9% increase in ASMs.
- Aircraft fuel expense per ASM increased 20.2% due to a 24.7% increase in
the average price per gallon of fuel from 60.15 cents in the 1996 quarter
to 75.03 cents in 1997.
- Depreciation and amortization expense per ASM decreased 22.2% due in part
to lower 1997 depreciation expense as certain ramp equipment was
depreciated to net realizable value in 1996.
- Amortization of excess reorganization value per ASM decreased 15.4%
primarily due to the 16.9% increase in ASMs.
- Other operating expenses per ASM decreased 10.9% to 1.47 cents from 1.65
cents as increases in passenger traffic-related costs such as CRS booking
fees, catering costs, and credit card discount fees, and fuel taxes were
more than offset by the 16.9% increase in ASMs.
40
<PAGE> 42
Net nonoperating expenses decreased $1.4 million to $7.5 million in the
first quarter of 1997 from $8.9 million in 1996. Excluding interest income and
expense associated with intercompany notes, the year-over-year change was
primarily due to a net decrease in interest expense as AWA reduced outstanding
debt by $42.3 million.
Income tax expense for financial reporting purposes for the three months
ended March 31, 1997 was relatively unchanged when compared to the 1996 quarter.
1996 COMPARED WITH 1995
In 1996, AWA realized net income of $8.5 million which included a pretax,
nonrecurring special charge of $65.1 million (See Note 12, "Restructuring and
Other Nonrecurring Special Charges" in Notes to Financial Statements). Excluding
the nonrecurring special charge, AWA recorded net income of $48.7 million.
Comparative amounts for 1995 were net income of $60.3 million (excluding a $10.5
million restructuring charge), and income tax expense for financial reporting
purposes of $53.6 million.
The decline in pretax income (excluding the nonrecurring special charge and
before extraordinary item) for the 1996 period resulted from 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 into Las Vegas and aggressive fare sale activity also
adversely impacted 1996.
Total operating revenues were $1.7 billion in 1996 compared to $1.6 billion
in 1995. Passenger revenues for 1996 were $1.6 billion, an increase of 12.8%
over the prior year. Cargo and other revenues increased 3.4% to $101.8 million
in 1996. Other revenues consist primarily of alcoholic beverage sales, contract
service sales and service charges.
Capacity, as measured by ASMs, increased 11.3% in 1996 compared to 1995 as
AWA completed the first year of a two-year strategic growth plan. Revenue
passenger miles increased 15.1% in 1996. Load factor for the 1996 period
increased by 3.5% (2.4 points) to a company record of 70.9%, despite the 11.3%
capacity increase. Revenue per passenger mile (yield) decreased 2.0%, and RASM
increased by 1.2% in 1996 from 1995.
CASM increased to 7.73 cents in 1996 from 7.19 cents in 1995 primarily due
to a nonrecurring special charge of $65.1 million and increases in jet fuel
prices. Excluding the nonrecurring special charge, and jet fuel and related
taxes, CASM increased year-over-year only 1.0% to 6.24 cents in 1996. The
changes in the components of operating expense per available seat mile
(excluding the nonrecurring special charge) are explained as follows:
- The 9.6% decrease in salaries and related costs per ASM was primarily
related to the $12.1 million reduction in salaries related to AWA's
outsourcing of its heavy aircraft maintenance in December 1995 and a
reduction in AWArd Pay and incentive pay due to AWA's decline in income.
In addition, AWA continued to improve productivity as full-time
equivalent head count increased 10.8% versus an 11.3% increase in ASMs.
- Aircraft rents per ASM increased 5.6% primarily due to a net addition of
eight leased aircraft to the fleet during 1996.
- Rentals and landing fees per ASM decreased primarily due to the 11.3%
increase in ASMs.
- The average price per gallon of aircraft fuel increased 19.1% to 66.49
cents in 1996 from 55.82 cents in 1995. This increase in fuel price
increased 1996 operating expense by approximately $37.5 million.
- Aircraft maintenance materials and repairs expense per ASM increased
70.6% due primarily to an increase in capitalized maintenance which
increased capitalized maintenance amortization expense by $27.7 million
in 1996 when compared with 1995. The unamortized balance of capitalized
maintenance grew to $102.5 million at December 31, 1996, an increase of
$47.5 million from December 31, 1995. In addition, maintenance expense
per ASM increased further in the 1996 period due to the classification
for accounting purposes of fees paid to outside vendors to complete
aircraft maintenance following the
41
<PAGE> 43
outsourcing of that work in late 1995. 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 identifiable assets
expense per ASM decreased 29.4% primarily due to the reduction in the
unamortized balance of excess reorganization value as the result of (i)
utilization of tax attributes of the pre-reorganization company,
including net operating loss carryforwards, such reduction amounting to
$16.7 million in 1996 and $50 million in 1995, and (ii) recognition of a
deferred tax asset of $74.7 million in 1995.
- Other operating expenses per ASM increased 9.2% primarily due to the 4.3
cents per gallon federal fuel tax for which AWA became liable commencing
October 1, 1995, an increase in interrupted trip expense due to the
operating dependability difficulties discussed above, and an increase in
passenger traffic related costs.
- Contributing to the increase in operating cost per ASM was the effect of
the first class installation program that was completed in late 1995 and
reduced 1996 ASMs by 2.6% but had no significant effect on operating
costs.
Net nonoperating expenses decreased $12.2 million to $34.2 million in 1996
from $46.4 million in 1995 due primarily to a net decrease in interest expense
resulting from reduced levels of debt and lower interest rates.
Income tax expense for financial reporting purposes in 1996 decreased to
$24.9 million from $53.6 million in 1995 due principally to lower pretax income.
AWA incurred extraordinary charges in 1996 and 1995 of $1.1 million and
$984,000, respectively, for the partial prepayment of its 10 3/4% 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, 1994
THROUGH DECEMBER 31, 1994, AND JANUARY 1, 1994 THROUGH AUGUST 25, 1994
For the periods ended December 31, 1995 and 1994, AWA 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 in 1995 compared to a combined
$1.4 billion for 1994. Passenger revenues increased 10% to $1.5 billion during
1995. Cargo and other revenues increased 10.7% to $98.4 million for 1995. The
balance of other revenues includes revenues generated primarily from alcoholic
beverage sales, contract service sales and service charges.
Capacity, as measured by ASM's, increased 7.5% in 1995 compared to the
combined 1994 period, primarily due to an increase in the average stage length
of 1.5% and the addition of six aircraft to the fleet. Revenue passenger miles
increased 8.8% in 1995 compared to the combined 1994 period while load factor
increased by 0.8 points and yield increased 1.1%.
CASM increased to 7.19 cents in 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 in 1995 to provide for
performance awards related to AWA'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 AWA's Total Pay program in January 1995. These pay increases
were effected in order to make employees' compensation levels more
competitive
42
<PAGE> 44
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 AWA's adjustment of
operating leases to fair market value under fresh start reporting. Such
decrease was offset by a net addition of six aircraft to the fleet.
- Rentals and landing fees per ASM decreased primarily due to the 7.5%
increase in ASM's.
- The average price per gallon of aircraft fuel increased slightly to 55.8
cents in 1995 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 expense in August 1994. For 1995 and the period
August 26 through 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 through 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 in 1995.
- Amortization of reorganization value in excess of identifiable assets
expense increased $20.8 million compared to 1994.
- A restructuring charge incurred in 1995 associated with AWA'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.
Net nonoperating expenses decreased $281.5 million to $46.4 million in 1995
from a combined $327.9 million for 1994. This net decrease resulted from: a
decrease in reorganization expense of $273.7 million since AWA 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 AWA 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 in 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.
LIQUIDITY AND CAPITAL RESOURCES
Unrestricted cash and cash equivalents and short-term investments decreased
to $165.7 million at March 31, 1997 from $176.6 million at December 31, 1996
primarily due to the repurchase of 1.91 million warrants to purchase Class B
Common Stock of Holdings for approximately $13.3 million by AWA. (See Note 4,
"Warrants" in Notes to Condensed Financial Statements.) Net cash provided from
operating activities decreased to $53.7 million for the quarter ended March 31,
1997 from $58.7 million in 1996 due principally to the payment in 1997 of
approximately $43 million in federal air transportation excise taxes. Net cash
used in investing activities decreased to $31.2 million for the first quarter
period of 1997 from
43
<PAGE> 45
$32.9 million for the 1996 period. Net cash used in financing activities was
$23.6 million for the first quarter compared to $13.6 million in the 1996 period
primarily due to the warrant repurchase.
AWA has a working capital deficiency which increased to $188.5 million at
March 31, 1997 from $170.9 million at December 31, 1996. 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. Despite the working capital deficiency, AWA expects
to meet all of its obligations as they become due.
AWA's long-term debt maturities through 1999 consist primarily of principal
amortization of notes payable secured by certain of AWA's aircraft. As of March
31, 1997, such maturities were $36 million, $43.2 million and $70.4 million,
respectively, for the remainder of 1997, 1998 and 1999. Management expects to
fund these requirements with cash from operations.
At March 31, 1997, Holdings had net operating loss carryforwards ("NOL")
and general business tax credit carryforwards of approximately $471.8 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 credit carryforwards is subject to certain
limitations. AWA is a loss corporation within the meaning of Section 382. The
issuance of certain common stock by AWA pursuant to the plan of reorganization
and emergence from bankruptcy in 1994 resulted in an ownership change within the
meaning of Section 382. This ownership change has resulted in an annual
limitation (the "Section 382 Limitation") upon AWA's ability to offset any
post-change taxable income with pre-change NOL. Should AWA 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 to use in
subsequent tax years, provided the pre-change NOL has not been exhausted nor has
the carryforward period expired.
AWA'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%. Nevertheless, AWA'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 tax
attributes (including NOLs, subject to certain limitations) of the Predecessor
Company that serve to reduce AWA's actual income tax liability. To the extent
the tax attributes of the Predecessor Company reduce AWA'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 AWA's
Reorganization Value in Excess of Amounts Allocable to Identifiable Assets.
In December 1994, AWA entered into a support contract with International
Aero Engines ("IAE") which provides for the purchase by AWA of six new V2500-A5
spare engines scheduled for delivery beginning in 1998 through 2000 for use on
AWA's A320 fleet. Such engines have an estimated aggregate cost of $42 million.
At March 31, 1997, AWA had firm commitments to AVSA S.A.R.L., an affiliate
of Airbus Industrie ("AVSA"), for a total of 17 Airbus A320-200 aircraft with
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, AWA estimates
such aggregate net cost to be approximately $850 million. AWA 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 AWA will be able to obtain
such capital in sufficient amounts or on acceptable terms, and a default by AWA
under the AVSA agreement or any such commitment could have a material adverse
effect on AWA.
In November 1996, America West Airlines 1996-1 Pass Through Trusts issued
$218.6 million of Pass Through Certificates in connection with the refinancing
of eight Airbus A320 aircraft and three IAE V2500 spare jet engines. The
combined effective interest rate on the financing is 7.05%. The proceeds of the
transaction were used to refinance the indebtedness incurred by the owners of
the aircraft and engines leased
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<PAGE> 46
to AWA. Under the arrangements, the financial benefits of the transactions are
shared among AWA, the equity investors in leverage leases covering the aircraft
and U.S. subsidiaries of GPA, the original lessees under the restructured
leases. Benefits to AWA include the agreed termination of arrangements with GPA
pursuant to which GPA could cause AWA to lease up to four aircraft over the
balance of the decade and a reduction in rental expense approximating $500,000
per year.
The Pass Through Certificates were issued by separate pass through trusts.
The equipment notes are secured by a security interest in the aircraft and
engines and an assignment of AWA's leases of such equipment. Neither the
equipment notes nor the pass through certificates are direct obligations of, or
guaranteed by, AWA, and the corresponding debt and interest expense are not
included in AWA's financial statements.
As of March 31, 1997, AWA's fleet consisted of 101 aircraft of which 20
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.
If AWA 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 AWA will
be able to obtain such capital in sufficient amounts or on favorable terms.
Capital expenditures for the quarters ended March 31, 1997 and 1996 were
approximately $41 million and $32.8 million, respectively. Included in these
amounts are capital expenditures for capitalized maintenance of approximately
$22.4 million for the first quarter of 1997 and $11.6 million for the first
quarter of 1996. Capital expenditures for the year ended December 31, 1996 were
approximately $155.7 million, including capitalized maintenance expenditures of
approximately $87.2 million.
Certain of AWA's long-term debt agreements contain minimum cash balance
requirements, leverage ratios, coverage ratios and other financial covenants
with which AWA was in compliance at March 31, 1997.
GOVERNMENT REGULATIONS
On August 20, 1996, the Small Business Job Protection Act of 1996
reinstated the federal air transportation excise taxes (the 10% ticket tax, the
6.25% air cargo tax and the $6.00 international departure tax) effective August
27, 1996. Management believes that AWA benefited from the expiration of the
federal air transportation excise taxes on December 31, 1995 and that the
reimposition of such excise taxes on August 27, 1996 had a negative impact on
AWA, although the amount of such benefit or negative impact directly resulting
from the excise taxes cannot be precisely determined. The reinstated federal air
transportation excise taxes expired on December 31, 1996 and on March 7, 1997,
the taxes were reimposed to September 30, 1997. It is unclear at this time
whether the taxes will expire on September 30, 1997, or will once again be
extended.
In addition, AWA's operating costs have been and will continue to be
affected by various safety, security and other regulations and requirements
applicable to its operations. 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 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 and propose funding alternatives to the existing air transportation
excise taxes (primarily the 10% ticket tax) which currently fund the FAA, which
expired on December 31, 1996 but were reinstated effective March 7, 1997 through
September 30, 1997. The report of the Review Commission is scheduled to be
released in September 1997. AWA cannot forecast the results of the Review
Commission's activities or what proposals the Review Commission will make.
Implementation of these proposals could increase the cost of the airline
operations and could have a material adverse effect on AWA's operating results.
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. These
measures place additional security and safety requirements on the airline
industry and result in additional operating costs. AWA cannot forecast what
additional costs or the impact on revenue that would be associated with
complying with such increased safety and security requirements.
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<PAGE> 47
BUSINESS
OVERVIEW
AWA 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. Management believes AWA is the
lowest cost full service carrier in the United States. At March 31, 1997 AWA
served 57 destinations, including six destinations in Mexico and one in Canada,
with a fleet of 101 aircraft. AWA offers service to an additional 17
destinations through an alliance agreement with Continental and 17 commuter
service and regional destinations through an alliance agreement with Mesa.
AWA is the leading airline serving Phoenix and Las Vegas, with
approximately 36% and 23% of total revenue passenger miles, respectively, based
on the twelve months ended December 31, 1996. The Phoenix and Las Vegas airports
are the seventh and thirteenth largest airports and the fifth and eighth largest
domestic hubs in the United States as measured by passenger enplanements. AWA
believes that these hubs are well positioned for continued growth due to their
geographically favorable locations with access to key southwestern and west
coast markets, relatively low operating costs, year-round fair weather and
modern, uncongested facilities. Substantially all of AWA's passenger traffic is
channeled into or through its hubs, which serve as gateways for AWA's route
network. Through its hub-and-spoke system, AWA serves more markets with greater
frequency than would be possible with the same number of aircraft in a
point-to-point route system.
AWA operates with a low cost structure. AWA's operating cost per ASM for
the first three months of 1997 was 7.40 cents, which was approximately 21.1%
less than the average cost per ASM of the nine major domestic airlines. AWA
believes that its low cost structure is a significant competitive advantage
relative to other full service carriers and also enables AWA to compete
effectively against low cost carriers in its short-haul local markets. As a full
service airline, AWA believes that it distinguishes itself from other low cost
carriers by offering passenger services that include assigned seating, meal
service, participation in computerized reservation systems, interline ticketing,
first class cabins, baggage transfer and various other services.
Through America West Vacations, AWA arranges and sells vacation packages
that include hotel accommodations, air fare, ground transportation and a variety
of entertainment options. This business unit generated approximately $190
million in gross package sales in 1996. America West Vacations occupies a
substantial position in the Las Vegas destination market and arranges packages
for travel to the other traditional vacation destinations served by AWA,
including Arizona, California, Florida, Canada and Mexico. To further develop
this business, the Company intends to combine America West Vacations with AWA's
charter business and reorganize such operations as a separate subsidiary of
Holdings during 1997.
STRATEGY
The Company's strategy seeks to achieve additional revenue growth and
profitability by capitalizing on its key competitive strengths while maximizing
financial flexibility. The principal elements of the Company's strategy are (i)
strengthening AWA's position in its existing hubs through strategic expansion,
(ii) maintaining AWA's position as a leading low cost full service carrier,
(iii) focusing on airline reliability and customer service, (iv) operating a
modern and efficient fleet, (v) continuing to develop AWA's passenger base
through key alliances and (vi) pursuing opportunities to expand its leisure
travel businesses.
STRENGTHEN POSITION IN EXISTING HUBS THROUGH STRATEGIC EXPANSION
AWA's strategy is designed to capitalize on its strong position in its
Phoenix and Las Vegas hubs. In February 1996, AWA began implementation of a
two-year plan to expand its principal hub operations and increase connecting
traffic and service to longer-haul nonstop markets. Pursuant to this plan,
during 1996 AWA increased ASMs by 11.3% and added six new cities to AWA's route
network. In addition, AWA has increased flight frequencies to enhance service to
existing West Coast destinations and to expand connecting opportunities through
Phoenix to long-haul flights to the East and Midwest. AWA has also sought to
increase
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asset utilization through the expansion of its night flight service to Las
Vegas, utilizing aircraft for this service that otherwise would be idle
overnight. Pursuant to the growth plan, AWA added one new city to its route
network in the first quarter of 1997 and expects to introduce service to at
least one additional city by December 31, 1997.
MAINTAIN ITS POSITION AS A LEADING LOW COST AIRLINE
AWA is committed to maintaining its low cost structure, which it has
achieved primarily through employee productivity, favorable labor costs per ASM
and industry-leading asset utilization. AWA maintained low unit costs by
focusing on productivity at all levels. Additionally, the contract between AWA
and the Airline Pilots Association, which provides for fixed wage scale
increases of approximately 2.8% per year until the contract expires in April
2000, is, and will continue to be, a factor in maintaining AWA's low cost
structure. In 1996, AWA increased its ASMs by 11.3% while increasing its
full-time equivalent head count by 10.8%.
FOCUS ON RELIABILITY AND CUSTOMER SERVICE
AWA is committed to maintaining its reliability and to improving its
overall customer service. As a result of customer service and operational issues
encountered in the third quarter of 1996, AWA initiated a program entitled Get
the Product Right . . . Together, aimed at maximizing the airline's reliability
and further improving customer service. Following the implementation of this
program, AWA's completion rate increased from a low of 96% in the third quarter
of 1996 to an average of 98.4% and 99% in the fourth quarter of 1996 and the
first quarter of 1997, respectively. Consistent with its strategy of being a low
cost airline, this program is designed to be implemented without adversely
affecting AWA's cost structure. In May 1997, AWA was ranked number one in
customer satisfaction among the nine major domestic airlines, for flights of 500
miles or less, in the Airline Customer Satisfaction -- U.S. Flights Study
conducted by Frequent Flyer Magazine and J.D. Power and Associates.
OPERATE A MODERN AND EFFICIENT FLEET
AWA enjoys operational efficiencies due to its modern, fuel efficient
fleet. At March 31, 1997, AWA's fleet consisted of 60 Boeing 737s, 27 Airbus
A320s and 14 Boeing 757s, with an average age of approximately 10.2 years. Most
of AWA's existing aircraft are held under leases with considerable fleet plan
flexibility. As a result, in the event economic conditions change adversely, AWA
can reduce its fleet size and reduce its aircraft related financial obligations
by not renewing expiring aircraft leases.
CONTINUE TO DEVELOP PASSENGER BASE THROUGH ALLIANCES
AWA plans to continue to employ alliance agreements to expand its passenger
base and in some cases to achieve cost savings through the reduction of
redundant labor and facilities. AWA's alliance agreements generally provide for
code-sharing arrangements and linking of frequent flyer programs, and in some
cases involve coordination of flight schedules, sharing of ticket counter space,
coordination of ground handling operations and joint purchasing and marketing
efforts. AWA currently has alliance agreements with Continental, British
Airways, Northwest Airlines and Mesa. Management believes that AWA's
code-sharing activities result in increased travel and profitability for AWA and
AWA intends to pursue additional alliances as opportunities warrant.
EXPAND LEISURE TRAVEL BUSINESSES
The Company's strategic plan includes the expansion of its leisure tour
packaging and charter businesses which, the Company believes, present
opportunities for growth. The Company further believes that it will be
competitive in these businesses because of its low cost structure and expertise
gained in developing and managing America West Vacations and AWA's professional
and college sports chartering business. During 1997, the Company expects to
combine the America West Vacations and charter business under a separate
subsidiary of Holdings, establish a private label tour packaging business,
pursue the management of other airlines' vacation packaging businesses, expand
the scope of its vacation and charter products and introduce new package tour
destinations.
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OPERATIONS
AIRLINE OPERATIONS
AWA 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. AWA believes it is the lowest
cost full service carrier in the United States. At March 31, 1997, AWA served 57
destinations, including six destinations in Mexico and one in Canada, with a
fleet of 101 aircraft. AWA also offers service to additional destinations
through alliance agreements with Continental and Mesa.
AWA seeks to maximize its market share by operating primarily through hub
airports in Phoenix and Las Vegas and, to a lesser extent, through its mini-hub
in Columbus. The success of AWA'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 AWA's other destinations. AWA 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, AWA 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.
AWA is the leading airline serving Phoenix Sky Harbor International Airport
and McCarran International Airport in Las Vegas, based upon revenue passenger
miles, with approximately 36% and 23% of total revenue passenger miles,
respectively, for the twelve months ended December 31, 1996. In both markets
AWA's principal competitor is Southwest Airlines, with approximately 22% and 17%
of total revenue passenger miles in Phoenix and Las Vegas, respectively, for the
twelve months ended December 31, 1996. At March 31, 1997, AWA served 49
destinations from its Phoenix hub, 45 destinations from its Las Vegas hub and 12
destinations from Columbus. During 1996, AWA had approximately 49% of Columbus
revenue passenger miles compared to approximately 9% for US Airways, AWA's
principal competitor in Columbus. At March 31, 1997, AWA offered service to an
additional 17 destinations through its alliance with Continental and 17 commuter
service and regional destinations through its alliance with Mesa.
As a result of certain customer service and operational issues in the third
quarter of 1996, AWA initiated a program entitled Get the Product Right . . .
Together, aimed at maximizing the airline's on-time performance and further
improving customer service. If successfully implemented, management believes
this program will achieve significant advances in reliability through
refinements to hub connection schedules, the addition of an operational spare
aircraft and approximately 60 line mechanics, the establishment of two
additional overnight maintenance bases, and improved coordination with providers
of the airline's heavy aircraft maintenance. Management anticipates that those
initiatives, together with expanded training of front line staff, increased
staffing in critical areas (such as reservations), advanced technologies
installed during 1996, enhanced aircraft appearance as the result of first class
and new interior installations completed in 1996 and improved catering and
onboard entertainment, will all operate together to improve customer
satisfaction during 1997.
Alliances. AWA has alliance agreements with Continental, British Airways,
Northwest Airlines and Mesa. AWA's alliance agreement with Continental provides
for code-sharing arrangements, coordinating flight schedules, sharing ticket
counter space, linking frequent flyer programs and membership clubs, and
coordinating ground handling operations. Through code-sharing, each airline is
able to offer additional destinations to its customers without materially
increasing operating and capital expenses. AWA has achieved cost savings from
the Continental 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.
AWA's alliance agreement with British Airways includes code-sharing
arrangements, reciprocal frequent flyer privileges and ground handling
operations, and, using AWA's existing service, allows British Airways to offer
connecting service to and from British Airways' Phoenix gateway to eight
destinations served by AWA in the western United States. Through AWA's
code-share agreement with Northwest Airlines, AWA provides connecting service
from Northwest Airlines' Pacific routes to Las Vegas and Phoenix. AWA's
code-sharing agreement with Mesa, which adds 17 destinations to AWA's route
network, establishes Mesa as a feeder carrier for AWA at its Phoenix hub. The
code-sharing agreement with Mesa provides for coordinated flight schedules,
passenger handling and computer reservations under the AWA flight designator
code, thereby
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allowing passengers to purchase one air fare for their entire trip. On
code-sharing flights, Mesa operates under the name "America West Express" and
has incorporated AWA's color scheme and commercial logo on certain aircraft
utilized on these routes.
Leisure Travel Businesses. Through its America West Vacations division, AWA
arranges and sells vacation packages that include hotel accommodations, air
fare, ground transportation and a variety of entertainment options. This
business unit generated approximately $190 million in gross package sales in
1996, sold approximately 823,000 room nights and approximately 137,000 rental
car days, and handled approximately 557,000 passengers. America West Vacations
occupies a substantial position in the Las Vegas destination market and arranges
packages for travel to the other traditional vacation destinations served by AWA
including Arizona, California, Florida, Canada and Mexico. To further develop
this business, AWA expects to combine the America West Vacations with AWA's
charter business and reorganize these businesses as a separate subsidiary of
Holdings during 1997.
AIRCRAFT
At March 31, 1997, AWA operated a fleet of 60 Boeing 737s, 27 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 27.5 --
B737-200......................................... Leased 14 15.3 4.3
B737-200......................................... Owned 5 18.1 --
B737-300......................................... Leased 29 10.0 3.6
B737-300......................................... Owned 11 8.4 --
B757-200......................................... Leased 12 10.7 8.1
B757-200......................................... Owned 2 7.5 --
A320-200......................................... Leased 27 6.9 10.6
---
101 10.2 6.7
===
</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 AWA or serves as
collateral for a non-purchase money loan.
As of March 31, 1997 and through December 1998, leases for 20 of AWA's
aircraft are scheduled to terminate (such aircraft are 12 Boeing B737-300s, two
Boeing B737-200s, four 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. At the option of either the lessor or AWA, the leases for two Airbus A320
aircraft may be extended for a period of two years, and the lease for one Airbus
A320 aircraft may be extended for a period of one year. 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 March 31, 1997, AWA employed 8,942 full-time and 2,500 part-time
employees, for an equivalent of 10,015 full-time employees.
LABOR RELATIONS
The airline business is labor intensive. Wages, salaries and benefits
represented approximately 23.1% of AWA's operating expenses for the year ended
December 31, 1996. To encourage increased productivity by its workforce, AWA
awards performance bonuses ("AWArd Pay") from 5% to 25% of base pay to eligible
non-executive non-union employees provided certain annually established
operating income targets are attained. Eligibility is determined at the time of
distribution. In February 1996, AWA paid performance awards amounting to 10.25%
of each eligible employee's base pay for 1995 performance. The operating income
targets
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established for 1996 were not achieved, largely as the result of AWA's
performance during the third quarter of that year. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." However, AWA's
Board of Directors concluded that the failure to achieve the 1996 operating
income target was due largely to circumstances beyond the control of the
eligible employees and that it was important to reward the eligible employees
for their substantial efforts in achieving AWA's first and second quarter record
performance and in AWA's return to record earnings in the fourth quarter.
Accordingly, in an exception to policy, in February 1997, the Board of Directors
elected to pay AWArd Pay performance bonuses equal to the minimum of 5% of
eligible employees' base pay in respect of 1996 performance.
There have been numerous attempts by unions to organize AWA's employees,
and AWA expects such organization efforts to continue in the future. Several
groups of AWA's employees have selected their collective bargaining
representatives and negotiations are in progress. AWA cannot predict at this
time the outcome or the terms of any future collective bargaining agreement and
therefore the effect, if any, on AWA's operations or financial performance.
AWA's pilots are represented by the Airline Pilots Association. In May
1995, a five-year collective bargaining agreement with AWA's pilots became
effective. The terms of this contract are consistent with AWA's productivity
objectives. Under this contract, pilot wage scales will increase 9.41% from
December 31, 1996 until April 29, 2000, or approximately 2.8% per year during
that period. 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 September 1994, the National Mediation Board ("NMB") certified the
Association of Flight Attendants as the collective bargaining representative of
AWA's flight attendants 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 AWA'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. AWA is currently
litigating the certification of the IBT and the matter is presently before the
Ninth Circuit Court of Appeals. To comply with the ruling of the lower court,
AWA has commenced negotiations with the IBT on a provisional basis.
In April 1996, the IBT filed an application with the NMB seeking to become
the collective bargaining representative of AWA's 40 stock clerks. The IBT lost
the representation election in July 1996. Following the announcement of those
election results, the IBT filed a claim of election interference against AWA.
Both AWA 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 Transportation Workers Union ("TWU") was certified
to represent AWA's approximately 40 dispatchers and contract negotiations have
commenced.
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. AWA 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 AWA's routes (as well as increased competition from or the
introduction of new services by established carriers) could negatively impact
AWA's results of operations. AWA competes with a number of major airlines on
medium- and long-haul routes through its hubs and with 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 AWA 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
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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 AWA and other similarly situated users at a
competitive disadvantage to the airlines controlling the systems. Effective
January 8, 1996, AWA implemented electronic or paperless ticketing to respond to
customer needs and to reduce distribution costs for tickets booked directly
through AWA, and by year end 1996, approximately 21% of its tickets were
processed electronically.
FREQUENT FLYER PROGRAM
All major U.S. airlines have established frequent flyer programs to
encourage travel on that particular carrier. AWA offers the FlightFund program
that allows members to earn mileage credits by flying AWA, 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 AWA's
alliance agreement with both Continental and British Airways, AWA has formed
frequent flyer program partnerships. FlightFund and Continental One Pass program
members may earn and redeem mileage credit in connection with flights to all AWA
and Continental destinations. FlightFund and British Airways Executive Club
members may also earn and redeem mileage credit for flights to all AWA and
British Airways destinations. In addition, AWA 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, AWA issues mileage award certificates that can be redeemed for
various travel awards, including first class upgrades and tickets on AWA or
other airlines participating in AWA'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. AWA is
required to purchase space on other airlines to accommodate such award
redemption.
AWA 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 membership at December 31, 1996 was approximately 2.7 million
participants. At December 31, 1996, 1995 and 1994, AWA estimated that
approximately 358,000, 342,000 and 369,000, respectively, travel awards were
expected to be redeemed. Correspondingly, AWA had an accrued liability of $11.3
million, $10.7 million and $9.8 million for 1996, 1995 and 1994, respectively.
The accrual is based upon AWA'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, 1996, 1995 and 1994, was approximately 130,000,
111,000 and 109,000, respectively, representing 2.3%, 2.3% and 2.6% of total
revenue passenger miles for each respective period. AWA does not believe that
the usage of free travel awards results in any significant displacement of
revenue passengers due to AWA's ability to manage frequent flyer travel.
FACILITIES
AWA's principal facilities are associated with its hub operations in
Phoenix, Las Vegas and Columbus. AWA operates from Terminal 4 of Phoenix Sky
Harbor International Airport pursuant to a lease agreement that includes 28
gates and approximately 255,000 square feet of space at March 31, 1997. AWA also
leases approximately 39,000 square feet of additional space at the airport for
administrative offices and pilot training and owns a 375,000 squire foot
maintenance and technical support facility that includes four hangar bays,
hangar shops, two flight simulator bays, and warehouse and commissary
facilities.
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In Las Vegas, AWA leases approximately 79,000 square feet of space a
McCarran International Airport, which includes seven gates and adjoining holding
room areas. At its Columbus mini-hub, AWA leases 30,000 square feet and seven
gates. Pursuant to AWA's alliance agreement with Continental, certain of the
station operations for both carriers have been consolidated in an effort to
reduce operating expenses.
Space for ticket counters, gates and back offices has also been obtained at
each of the other airports served by AWA, either by lease from the airport
operator or by sublease from another airline.
AWA owns 68,000 square foot America West Corporate Center at 222 S. Mill
Avenue in Tempe, Arizona. AWA currently leases approximately 389,000 square feet
of general office and other space in Phoenix and Tempe, Arizona.
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 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 December 31, 1996, AWA's fleet consisted of 101
aircraft, all of which meet Stage III noise reduction requirements except for 21
aircraft that meet the FAA's Stage II (but not Stage III) noise reduction
requirements. The aircraft that do not meet the Stage III standards must be
retired or significantly modified prior to the year 2000. Management is
currently considering its options regarding these aircraft and expects to decide
whether to install hush kits on those aircraft or replace them with Stage III
aircraft.
Numerous airports served by AWA, including those at 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. AWA's Boeing 757-200s, Boeing 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
AWA began paying such tax on October 1, 1995. The expiration of such exemption
increased AWA's annual operating expenses by approximately $15.1 million for
1996.
EXCISE TAXES
Effective March 7, 1997, the federal air transportation excise taxes (the
10% ticket 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),
which had been effective from August 27, 1996 but had expired on December 31,
1996, were reinstated for the period ending September 30, 1997. As a result of
competitive pressure, AWA and other airlines have been limited in their
abilities to pass on the cost of the excise taxes to passengers through fare
increases.
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, AWA and other airlines have been limited in their
abilities to pass on the cost of the PFCs to passengers through fare increases.
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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.
Four of AWA's aircraft are currently affected by these aging aircraft ADs and
are in compliance with such ADs. AWA 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 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 and propose alternatives to the
excise taxes (primarily the 10% ticket tax) which currently fund the FAA. The
excise taxes had expired December 31, 1996 but were reinstated March 7, 1997 for
the period through September 30, 1997. The report of the Review Commission is
scheduled to be released on September 30, 1997.
AWA cannot forecast the results of the Review Commission's activities or
what proposals the Review Commission will make, but no change in the funding
mechanism is expected to be enacted prior to the completion of the Review
Commission's activities. Implementation of these proposals could significantly
increase the cost of airline operations and could have a material adverse impact
on AWA's operating results.
AIRCRAFT MAINTENANCE AND OPERATIONS
AWA 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 conducts regular safety audits and requires AWA 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 AWA's ground-based operations. AWA is also subject
to the jurisdiction of the Department of Defense with respect to its voluntary
participation in their Commercial Passenger Airlift program administered by the
Air Force's Air Mobility Command. The carrier recently successfully underwent
its biannual capability survey and has been approved for continued use by the
military.
ADDITIONAL SECURITY AND SAFETY MEASURES
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. Such measures have resulted in
additional operating costs to the airline industry. Examples of 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 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 Aviation Safety Commission issued a final report on February 12, 1997
which reaffirms its earlier recommendations, including feasibility analyses of
the deployment and use of positive bag match systems, enhanced passenger
profiling procedures and advanced cockpit voice and flight data recorders. The
final report makes additional recommendations for certain safety and security
measures to be implemented by December 31, 1997, including the installation of
new ground proximity warning systems on all commercial
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aircraft, expansion of aging aircraft inspections to include non-structural
components, development of objective methods for carriers to monitor and improve
their own level of safety, and implementation of positive bag match based on
passenger profiling.
Future decisions which place increased security and safety requirements on
the airline industry could be significant. AWA cannot forecast, based upon the
final report of the Aviation Safety Commission, 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, although such
costs and revenue impact could be significant.
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 AWA, 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 permit 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 which would revert
to the FAA and be reassigned through a lottery arrangement.
AWA 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 in December
1997, and AWA intends to file a timely application for renewal. Approval of such
application is discretionary with the FAA. The utilization rates by AWA of all
the foregoing slots ranged from 94% to 99% in 1996.
ENVIRONMENTAL MATTERS
AWA 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 AWA strives to comply with environmental laws and
regulations, AWA has incurred and may incur costs to comply with applicable
environmental laws, including soil and groundwater cleanup and other related
response costs. AWA believes, however, that under current environmental laws and
regulations these costs would not have a material adverse effect on AWA'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 Phoenix Sky Harbor International
Airport, are the subject of Superfund investigations or state implemented
groundwater investigations. Although AWA occupies facilities at some of these
affected airports, AWA 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 AWA expects that
the costs of compliance will continue to increase.
LEGAL PROCEEDINGS
AWA emerged from bankruptcy on August 25, 1994 after operating as a
debtor-in-possession since June 27, 1991, when AWA filed a voluntary petition to
reorganize under Chapter 11 of the Bankruptcy Code. The Bankruptcy Court
confirmed AWA's plan of reorganization (the "Reorganization Plan") on August 10,
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1994. As contemplated by the Reorganization Plan, certain administrative and
priority tax claims remain pending against AWA, which, if ultimately allowed by
the Bankruptcy Court, would represent general obligations of AWA. Such claims
include claims of various state and local tax authorities, most of which
represent 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, AWA has reserved certain amounts believed by management to
be adequate. At March 31, 1997, approximately 399,000 shares of Holdings' Class
B Common Stock was 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. The Company believes that it will reach final
settlement of all remaining unresolved claims such that the remaining
approximately 399,000 shares will be distributed during 1997.
Following the commencement of AWA's bankruptcy proceedings in June 1991,
the Commission requested information from AWA concerning disclosures made in
AWA's annual and quarterly reports filed with the Commission in 1991. This
inquiry ultimately led to a settlement with the Commission, pursuant to which
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 AWA'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 AWA'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 AWA 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 provided that AWA neither admits nor denies any
violation of the securities laws.
AWA leases six aircraft which may be subject to a claim in an unspecified
amount as a result of the Internal Revenue Service potentially disallowing
investment tax credits and accelerated depreciation claimed by the lessor of
such aircraft. Under the terms of indemnity agreements, if such tax benefits
were fully or partially disallowed, AWA's monthly obligation under the
agreements could be increased by up to approximately $15,000 per aircraft
(approximately $1,080,000 per year for all six aircraft) for the period from
1991 to 2013. The payment 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. AWA is
unable to predict whether the Internal Revenue Service will prevail in matters
asserted against the lessor and, consequently, whether AWA 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 AWA, however,
management currently believes that it is unlikely that the disposition of these
matters will have a material adverse effect on AWA's financial condition.
Following AWA's outsourcing of its heavy maintenance, on December 27, 1995
the IBT and five individuals commenced a lawsuit against AWA in the Federal
District Court for the Northern District of Arizona alleging that the individual
plaintiffs had been terminated because they were IBT committee members or open
supporters of the union and that AWA wrongfully terminated approximately 378
members of the mechanics and related craft or class in connection with the
outsourcing in violation of federal labor laws. In September 1996, the court
dismissed the claims of the four discharged mechanics who had signed release
agreements and found that the IBT did not have standing in its own behalf to
pursue a claim under the Railway Labor Act (the "RLA"). Later that month, the
IBT filed a second supplemental amended complaint seeking to assert claims under
the RLA 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 AWA to discontinue the subcontracting of heavy maintenance, and an
order of reinstatement for the discharged mechanics who did not release their
claims. The remaining plaintiff asserted an Arizona wrongful discharge claim and
sought punitive damages. The court's decision on AWA's motion to dismiss the
plaintiffs' second supplemental amended complaint is pending.
AWA is a named defendant in a number of additional lawsuits and proceedings
arising in the ordinary course of business. While the outcome of the
contingencies, lawsuits or other proceedings against AWA cannot be predicted
with certainty, management currently expects that any liability arising from
such matters, to the extent not provided for through insurance or otherwise,
will not have a material adverse effect on the financial results and operations
of AWA.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Information with respect to the executive officers and directors of AWA is
set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH AWA
---- --- -----------------
<S> <C> <C>
William A. Franke...... 60 Chairman of the Board
Richard R. Goodmanson.. 49 Director, President and Chief Executive Officer
Julia Chang Bloch...... 55 Director
Stephen F.
Bollenbach........... 54 Director
Frederick W. Bradley,
Jr. ................. 70 Director
James G. Coulter....... 37 Director
John F. Fraser......... 66 Director
John L. Goolsby........ 55 Director
Richard C. Kraemer..... 53 Director
John R. Power, Jr...... 41 Director
Larry L. Risley........ 52 Director
Frank B. Ryan.......... 60 Director
Richard P. Schifter.... 44 Director
John F. Tierney........ 52 Director
Raymond S. Troubh...... 71 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 R. Carreon..... 43 Vice President and Controller
C. A. Howlett.......... 53 Vice President -- Public Affairs
</TABLE>
DIRECTORS
Set forth below is information regarding AWA's directors:
WILLIAM A. FRANKE. Chairman of the Board (Executive Committee). Mr. Franke
was named Chairman of the Board of Directors of AWA in September 1992. From
January 1, 1994 to February 4, 1997, Mr. Franke served as AWA's Chief Executive
Officer and from May 23, 1996 to February 4, 1997 he served as AWA's President.
Mr. Franke also serves as Chairman of the Board and Chief Executive Officer of
Holdings. In addition to his responsibilities at AWA, Mr. Franke serves as
president of Franke & Company, Inc., a financial services company he has owned
since May 1987. Mr. Franke serves as a director of Phelps Dodge Corp., Central
Newspapers Inc., the Air Transport Association of America, Beringer Wine
Estates, Inc. and Mtel Latin America, Inc. Mr. Franke serves as a Director and
Chairman of the Board of Airplanes Limited and a controlling trustee and
chairman of Airplanes U.S. Trust, entities involved in aircraft financing and
leasing. Mr. Franke also serves as a managing partner of Newbridge Latin America
L.P. ("Newbridge"), an investment fund controlled by TPG Partners.
RICHARD R. GOODMANSON. Director, President and Chief Executive Officer.
Mr. Goodmanson joined AWA in June 1996 and became a member of AWA's Board of
Directors effective on October 15, 1996. Mr. Goodmanson also serves as President
and Director of Holdings. On February 4, 1997, Mr. Goodmanson was elected
President and Director of Holdings and President and Chief Executive Officer of
AWA. From 1992 until 1996, Mr. Goodmanson served as Senior Vice President of
Operations at Frito-Lay, Inc. From 1980 until 1992, Mr. Goodmanson served as a
principal at the consulting firm of McKinsey and Company, Inc.
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JULIA CHANG BLOCH. (Compensation Committee.) Ms. Bloch has been a member
of AWA's Board of Directors since August 26, 1994. Ms. Bloch also serves as a
director of Holdings. Ms. Bloch is currently the president of the United
States -- Japan Foundation. From June 1993 to June 1996, Ms. Bloch served as the
group executive vice president, corporate relations of Bank of America
Corporation. 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, Special Committee.) Mr.
Bollenbach has been a member of AWA's Board of Directors since August 26, 1994.
Mr. Bollenbach also serves as a director of Holdings. He has been president,
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. Mr. Bollenbach is a
nominee for the Board of Directors of Time Warner, Inc. and serves as a director
of Ladbroke Group plc, Hilton Hotels Corporation and its subsidiaries, American
Gaming Association and Kmart Corporation.
FREDERICK W. BRADLEY, JR. (Compensation Committee, Executive Committee,
Special Committee.) Mr. Bradley has been a member of AWA's Board of Directors
since September 1992. Mr. Bradley also serves as a director of Holdings. Until
his retirement, Mr. Bradley 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 Banner
Aerospace, First Citicorp Life Insurance Co., 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. as well as President of IATA's
International Airline Training Fund of the United States.
JAMES G. COULTER. (Executive Committee.) Mr. Coulter has been a member of
AWA's Board of Directors since August 26, 1994. Mr. Coulter also serves as a
director of Holdings. 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 AWA's Board, Mr. Coulter was a member of the board of
directors of Continental. Mr. Coulter also serves as Co-Chairman of the Board of
Beringer Wine Estates, Inc. and is a director of Allied Waste Industries, Inc.,
Del Monte Holdings, Co. and Virgin Cinemas, Ltd.
JOHN F. FRASER. Mr. Fraser has been a member of AWA's Board of Directors
since August 26, 1994. Mr. Fraser also serves as a director of Holdings. Mr.
Fraser currently serves as vice chairman and director 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 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, The Thomson Corporation and Manitoba
Telecom Services, Inc.
JOHN L. GOOLSBY. (Audit Committee, Special Committee.) Mr. Goolsby has
been a member of AWA's Board of Directors since August 26, 1994. Mr. Goolsby
also serves as a director of Holdings. He is the president and chief executive
officer of The Howard Hughes Corporation (formerly named Summa Corporation), a
subsidiary of the Rouse Company 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.
RICHARD C. KRAEMER. (Compensation Committee, Special Committee.) Mr.
Kraemer has been a member of AWA's Board of Directors since September 1992. Mr.
Kraemer also serves as a director of
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Holdings. Mr. Kraemer is currently president of Chartwell Capital, Inc., private
investment company. 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 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 16, 1995.
JOHN R. POWER, JR. (Executive Committee.) Mr. Power has been a member of
AWA's Board of Directors since August 26, 1994. Mr. Power also serves as a
director of Holdings. 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
NRS Services and a subsidiary of J.I. Case Corporation.
LARRY L. RISLEY. (Audit Committee.) Mr. Risley has been a member of AWA's
Board of Directors since August 26, 1994. Mr. Risley also serves as a director
of Holdings. 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 AWA's
Board of Directors since March 17, 1995. Dr. Ryan also serves as a director of
Holdings. 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 as a director of Danielson
Holding Corporation, Siena Holdings, Inc. and Sequoia Systems, Inc. and as a
governor advisor to Rice University.
RICHARD P. SCHIFTER. (Compensation Committee.) Mr. Schifter has been a
member of AWA's Board of Directors since August 26, 1994. Mr. Schifter also
serves as a director of Holdings. 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 TPG Communications, Ryanair
Holdings plc and Mtel Latin America, Inc. and also serves as a managing partner
of Newbridge.
JOHN F. TIERNEY. Mr. Tierney has served as a member of AWA's Board of
Directors since December 1993. Mr. Tierney also serves as a director of
Holdings. 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
AWA's Board of Directors since August 26, 1994. Mr. Troubh also serves as a
director of Holdings. He is a financial consultant and currently serves on the
board of directors of ADT Limited, ARIAD Pharmaceuticals, Inc., Becton,
Dickinson and Company, Diamond Offshore Drilling, Inc., Foundation Health
Corporation, General American Investors Company, The MicroCap Fund, Inc., Olsten
Corporation, Petrie Stores Corporation, Time Warner Inc., Triarc Companies, Inc.
and WHX Corporation.
EXECUTIVE OFFICERS
Set forth below is information regarding the executive officers of AWA
other than Mr. Franke and Mr. Goodmanson, who are described above.
RONALD A. ARAMINI. Senior Vice President -- Operations. Mr. Aramini joined
AWA 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.
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JOHN R. GAREL. Senior Vice President -- Marketing and Sales. Mr. Garel
joined AWA in April 1995. From 1993 until early 1995, Mr. Garel was the Chief
Executive Officer of Cadmus Journal Services, a division of Cadmus
Communications. From 1990 until 1992, Mr. Garel served as Vice President,
Financial Planning and Analysis of Northwest Airlines 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 of both AWA and
Holdings. Mr. Johnson joined AWA in February 1995. From 1993 to 1994, Mr.
Johnson served as Senior Vice President and General Counsel to GE Capital
Aviation Services Limited. From 1989 to 1993 Mr. Johnson was employed by GPA,
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 of
both AWA and Holdings. Mr. Parker joined AWA in June 1995. From 1991 through
June of 1995, Mr. Parker worked in various capacities at Northwest Airlines,
including positions as Vice President -- Assistant Treasurer and Vice President
- -- Financial Planning and Analysis. From 1986 through 1991, Mr. Parker served in
various financial management positions at American Airlines.
MICHAEL R. CARREON. Vice President and Controller. Mr. Carreon joined AWA
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 of both AWA and Holdings.
Mr. Howlett joined AWA 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
AWA has certain alliance agreements with Continental and Mesa (the
"Alliance Agreements"). See "Business -- Operations". The Alliance Agreements
are designed to enhance AWA's growth in revenue passenger miles and operating
results. Continental and Mesa are principal stockholders of Holdings. AWA
entered into several agreements with Continental in 1994 and 1995 to implement
code-sharing arrangements and to coordinate ground handling operations. AWA paid
Continental approximately $21.7 million and received approximately $13.0 million
from Continental for such services in 1996. In September 1992, prior to Mesa
becoming a significant stockholder, AWA entered into a code-sharing agreement
with Mesa. Pursuant to this agreement, which establishes Mesa as a feeder
carrier for AWA at its hub in Phoenix, AWA assesses a per passenger charge for
facilities, reservations and other services from Mesa for enplanements on the
Mesa system. Such payments by Mesa to AWA totalled approximately $3.5 million
for 1996.
On October 14, 1994, AWA 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 Holdings. 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, AWA 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 AWA'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, AWA prepaid $25
million of the 10 3/4% Notes.
In February 1996, AWA helped facilitate the sale by certain principal
stockholders of 7,243,000 shares of its Class B Common Stock pursuant to AWA's
shelf registration statement filed with the Securities and Exchange Commission
(File No. 333-02129). The stockholders participating in such sale were TPG
Partners, TPG Parallel, Air Partners, Continental, Mesa and Lehman. Pursuant to
its obligations under a registration rights agreement entered into in August
1994, AWA entered into an underwriting agreement in connection with the
transaction containing customary provisions for transactions of such nature and
incurred expenses of approximately $250,000.
John F. Tierney, a director of Holdings and AWA, is the assistant chief
executive and finance director of GPA. AWA has entered into various aircraft
acquisitions and leasing arrangements with GPA at terms comparable to those
obtained from third parties for similar transactions. AWA currently leases eight
aircraft from GPA; the rental payments for such leases amounted to $29.5 million
for 1996. As of December 31, 1996, AWA was obligated to pay approximately $500
million under these leases which expire at various times throughout the year
2013.
In November 1996, the America West Airlines 1996-1 Pass Through Trusts
issued $218.6 million of pass through certificates representing fractional
undivided interests in such trusts. These certificates were issued to refinance
indebtedness incurred by the owner trustees of eight aircraft and three spare
engines (the "Equipment") which were subleased to AWA. Prior to the issuance of
the certificates, the Equipment was leased to certain United States subsidiaries
of GPA (the "GPA Subs," one of which is the Original Lessee), which subleased
the Equipment to AWA. As a result of the refinancing, the GPA Subs' interests
under leases between the owners of the Equipment and the GPA Subs were assigned
to AWA and the leases were amended and restated as leases between the owners and
AWA, with each GPA Sub being released from certain of its future obligations
thereunder.
Also as a result of the refinancing, GPA, the GPA Subs and AWA entered into
a Put Termination Agreement (the "Put Termination Agreement") which terminated
arrangements with GPA pursuant to which GPA could cause AWA to lease up to four
additional aircraft prior to June 30, 1999. Pursuant to the Put Termination
Agreement, AWA is obligated to make certain payments to the GPA Subs. For the
period from
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November 26, 1996 to December 31, 1996, the GPA Subs received $44,000 from AWA.
For the year 1997, the payments due to the GPA Subs under the Put Termination
Agreement are estimated to be $500,000. As compared to the payments AWA was
obligated to make under the prior subleases with respect to the Equipment, the
combined payments by AWA (i) under the Put Termination Agreement to the GPA Subs
and (ii) under the restated leases to the owners of the Equipment represent net
savings to AWA of approximately $8 million over the remaining 15-year term of
the leases. For the period from January 1, 1996, to November 26, 1996, payments
from AWA to the GPA Subs under the subleases relating to the Equipment totaled
approximately $30.4 million.
In connection with the transactions described in this Prospectus relating
to the issuance of the Certificates, the Put Termination Agreement will be
amended to provide for the obligation of AWA to pay the Original Lessee, over
the life of the Leases, certain amounts generally equal in the aggregate to (x)
the amounts which AWA would have been required to pay as monthly lease payments
under the subleases between AWA and the Original Lessee with respect to the
Aircraft (the "Prior Subleases", which will be terminated in connection with AWA
entering into the Leases) minus (y) the amount which AWA is required to pay as
Basic Rent under the Leases minus (z) an amount which results in a rent savings
to AWA, under the Leases as compared to the Prior Subleases, of approximately
$3.75 million. With respect to a particular Aircraft, an amount, generally equal
to the portion of the amount described in the preceding sentence to be paid with
respect to such Aircraft 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 amendment of the Put Termination Agreement described above
and subject to a number of conditions specified therein, GPA will be obligated
to indemnify and reimburse AWA for certain of its costs and expenses (including
certain of those arising from indemnification obligations of AWA) incurred in
connection with the transactions contemplated by this Prospectus. In addition,
GPA has agreed to indemnify AWA against certain liabilities arising under
applicable securities laws with respect to certain information in this
Prospectus, and AWA 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 transaction described in this Prospectus, AWA
will continue to sublease four of its A320-200 aircraft from the Original
Lessee.
In May 1996, AWA purchased warrants to purchase 802,860 and 1,384,615
shares of AWA's Class B Common Stock from Continental and GPA, respectively, for
$6,531,266 and $11,609,997, respectively. As part of the holding company
formation transaction, the AWA warrants became rights to acquire shares of
Holdings' Class B Common Stock. In March 1997, AWA purchased warrants to
purchase 1,584,915, 159,580 and 167,028 shares of Holdings' Class B Common Stock
from TPG, TPG Parallel and Air Partners, respectively, for $11,062,706,
$1,113,868 and $1,165,855, respectively.
William A. Franke, Chairman of the Board of AWA and Chairman of the Board
and Chief Executive Officer of Holdings, serves as a Director and Chairman of
the Board of Airplanes Limited and the Controlling Trustee and Chairman of
Airplanes U.S. Trust. Such entities were formed to acquire indirectly certain
aircraft from GPA, two of which are leased indirectly to AWA. In 1997, AWA
expects to enter into leasing arrangements for two additional aircraft from
Airplanes U.S. Trust.
In 1994 and 1995, AWA loaned Mr. Franke $470,282 and $203,136,
respectively, for the purpose of enabling him to pay income taxes attributable
to certain grants of AWA's Class B Common Stock made to Mr. Franke in 1994. In
January 1996, AWA 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.
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<PAGE> 63
In 1996, AWA loaned Mr. Franke $644,704 for the purpose of enabling him to
pay income taxes attributable to a grant of AWA's Class B Common Stock made to
him in 1996. The loan is payable in two equal installments on September 26, 2000
and September 26, 2001 and bears interest (payable semi-annually) at the rate of
5.65% per annum (10% per annum after maturity). The loan is secured by a portion
of the shares granted to Mr. Franke, but is otherwise nonrecourse to him.
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DESCRIPTION OF THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to four separate
Trust Supplements to be entered into between AWA 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. 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 Trust, 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 one Certificate
which 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 thereon 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 AWA or Holdings, 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; and (f) 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 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
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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 and (g) to pay Adjusted Expected Distributions to the
holders of Class D 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, 1998, 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 Trust) 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 Trust. 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, 1998, 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 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
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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.
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
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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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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
and the Class D 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
TRUST TRUST TRUST
EQUIPMENT EQUIPMENT EQUIPMENT
NOTES CLASS A NOTES CLASS B NOTES CLASS C
SCHEDULED TRUST SCHEDULED TRUST SCHEDULED TRUST
PAYMENTS OF EXPECTED PAYMENTS EXPECTED PAYMENTS OF EXPECTED
DATES PRINCIPAL POOL FACTOR OF PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR
----- ----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
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<CAPTION>
CLASS D
TRUST
EQUIPMENT
NOTES CLASS D
SCHEDULED TRUST
PAYMENTS EXPECTED
DATES OF PRINCIPAL POOL FACTOR
----- ------------ -----------
<S> <C> <C>
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</TABLE>
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)
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
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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, 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 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.
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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
Aircraft". 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 AWA, 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))
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
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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 and (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, 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
AWA 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 AWA contained in the
Pass Through Trust Agreements, the Refunding Agreements, the 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) AWA 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
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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 AWA.
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting the
execution by AWA 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 AWA and the assumption by such
corporation of AWA's obligations under such Pass Through Trust Agreement, (ii)
to add to the covenants of AWA for the benefit of holders of such Certificates
or to surrender any right or power in such Pass Through Trust Agreement
conferred upon AWA, (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)
TERMINATION OF THE TRUSTS
The obligations of AWA, 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
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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 AWA, 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 AWA 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, AWA 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 AWA 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, 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
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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 AWA 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.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that AWA believes to be reliable, but AWA 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
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longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and AWA is unable to locate a qualified
successor, (ii) AWA, 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, AWA 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 AWA 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 AWA'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. 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 Trust), 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 at any time
under such Liquidity Facility 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 Trust, 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 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
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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(g) and (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, in consultation with
AWA (whose recommendations the Subordination Agent will accept), 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
unsecured 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 AWA (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 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
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<PAGE> 78
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 on 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, 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, 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 AWA. (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 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
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<PAGE> 79
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, 1996 Kredietbank N.V. had total assets of 3,624 billion Belgian
francs (approximately $105 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 AWA takes no responsibility for
the accuracy thereof.
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<PAGE> 80
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. 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 Aircraft
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: (w) the Class A Trustee; (x) upon payment of Final Distributions to
the holders of Class A Certificates, the Class B Trustee; (y) upon payment of
Final Distributions to the holders of Class B Certificates, the Class C Trustee;
and (z) upon payment of Final Distributions to the holders of Class C
Certificates, the Class D 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 AND AIRCRAFT
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 AWA, then without the consent of each Trustee, (a) no Aircraft
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 or such Equipment Notes, and (b) the amount and payment dates of
rentals payable by AWA under the Lease for such Aircraft 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
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<PAGE> 81
rentals payable by AWA 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 Aircraft 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 Aircraft). (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 on any Liquidity Obligations) (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; and
(viii) certain fees and expenses of the Subordination Agent and the
Trustees. (Section 3.2)
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 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
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<PAGE> 82
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; and
(ix) Adjusted Expected Distributions to the holders of Class D
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 Trust), 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))
THE SUBORDINATION AGENT
Fleet National Bank will be the Subordination Agent under the Intercreditor
Agreement. AWA 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 may 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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DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The Aircraft consist of four Airbus Industrie model A320-231 aircraft. The
Aircraft are 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 Aircraft.
<TABLE>
<CAPTION>
APPRAISED VALUE
MANUFACTURER'S AIRCRAFT ENGINE DELIVERY ------------------------------------------
SERIAL NUMBER TYPE TYPE DATE(1) AISI BK MBA
- -------------- --------------- --------- ----------------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C> <C>
66 Airbus A320-231 IAE V2500 December 29, 1989 28,600,000 27,670,000 30,280,000
67 Airbus A320-231 IAE V2500 December 29, 1989 28,600,000 27,670,000 30,280,000
76 Airbus A320-231 IAE V2500 December 29, 1989 28,820,000 27,670,000 30,430,000
81 Airbus A320-231 IAE V2500 December 29, 1989 28,820,000 28,000,000 30,430,000
------------ ------------ ------------
$114,840,000 $111,010,000 $121,420,000
============ ============ ============
</TABLE>
- ---------------
(1) The delivery date indicated is for the purpose of the Leases. The original
delivery dates for the Aircraft from the manufacturer were in November and
December of 1989.
APPRAISED VALUE
The appraised values set forth in the foregoing chart were determined by BK
as of March 26, 1997, AISI as of March 19, 1997 and MBA as of March 31, 1997. As
part of this process, all three Appraisers performed "desktop" appraisals
without any physical inspection of the Aircraft. 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.
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 Aircraft
may be less than the appraised value thereof. In addition, the value of the
Aircraft 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 Aircraft, whether the Aircraft are 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 Aircraft 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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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.
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. 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 will be issued in four
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 Aircraft 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 Aircraft, and such Aircraft will be leased to
AWA pursuant to a Lease between the Owner Trustee under the applicable Owner
Trust and AWA. 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 the Equipment Notes.
Under each Lease, until the lien of the related Indenture is discharged,
AWA 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 Aircraft. The rental obligations of AWA under
each Lease will be general obligations of AWA. However, the Equipment Notes will
not be obligations of, or guaranteed by, AWA or Holdings.
SUBORDINATION
Series B Equipment Notes issued in respect of an Aircraft will be
subordinated in right of payment to Series A Equipment Notes issued in respect
of such Aircraft; Series C Equipment Notes issued in respect of such Aircraft
will be subordinated in right of payment to Series A and B Equipment Notes
issued in respect of such Aircraft; and Series D Equipment Notes issued in
respect of such Aircraft will be subordinated in right of payment to Series A, B
and C Equipment Notes issued in respect of such Aircraft. On each Equipment Note
payment date, (i) payments of interest and principal due on Series A Equipment
Notes issued in respect of any Aircraft will be made prior to payments of
interest and principal due on any Series B, C and D Equipment Notes issued in
respect of such Aircraft, (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 and D Equipment Notes issued in respect of such Aircraft, and
(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 Equipment
Notes issued in respect of such Aircraft.
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 and
all of the Series D Equipment Notes will be held by the Class D 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
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<PAGE> 85
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, 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
SERIAL NUMBER EQUIPMENT NOTES EQUIPMENT NOTES EQUIPMENT NOTES EQUIPMENT NOTES TOTAL
- -------------- --------------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
66
67
76
81
----------- ----------- ----------- ----------- -----------
Total
=========== =========== =========== =========== ===========
</TABLE>
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, 1998. Such interest will be computed on the
basis of a 360-day year consisting 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, except as otherwise provided in the related Indenture, 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 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 Aircraft 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 Aircraft if such Aircraft is not replaced by
AWA 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
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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
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 AWA 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 and
Series D 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 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 will be secured by
a perfected security interest in such Aircraft 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, all required hull insurance
and similar proceeds with respect to such Aircraft, all monies and securities
deposited with the related Indenture Trustee, and all proceeds of the
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foregoing. Basic Rent (as defined herein) payments for each Aircraft are payable
semi-annually on each Basic Rent payment date. Such payments, together with
certain other payments that AWA 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, AWA's obligations in respect of each
Aircraft will be those of a lessee under a "net lease". Accordingly, AWA 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 Aircraft and to maintain,
service, repair and overhaul (or cause to be maintained, serviced, repaired and
overhauled) the Aircraft. Unless an Indenture Event of Default with respect to
an Aircraft 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
AWA referred to under "The Leases -- Lease Events of Default" in the amount of
$1 million for each Lease in respect of certain amounts which may become payable
by AWA, indemnity payments and interest in respect thereof payable by AWA 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
AWA 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 Aircraft are not secured by any of the other Aircraft (as
described in "-- The Leases -- Events of Loss") or the Leases related thereto.
Subject to the right of AWA to re-register the Aircraft in other
jurisdictions, and subject to the cooperation of the applicable Owner Trustee
and Indenture Trustee, AWA 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 under the Federal Aviation Act. Such
recordation of the Indenture, the Lease and other relevant documents with
respect to each Aircraft will give the related Indenture Trustee a perfected
security interest in the related Aircraft 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 may be operated by AWA 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 Aircraft 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 could be adversely affected as
a legal or practical matter if such Aircraft 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".
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Funds, if any, held from time to time by an Indenture Trustee with respect
to any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft 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 AWA.
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following table sets forth LTV Ratios for the Equipment Notes issued in
respect of each Aircraft 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 Aircraft Value")
of the Aircraft securing such Equipment Notes.
The tables contain forward-looking information that is based on the
assumption that the value of each Aircraft included in the Assumed Aircraft
Value opposite May , 1997, which Assumed Aircraft Value reflects the lesser of
the average and median value of such Aircraft as appraised by each of the
Appraisers, depreciates by 2% per year until the fifteenth year after the year
of delivery of such Aircraft 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 Aircraft. 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>
AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL
NUMBER 66 NUMBER 67
---------------------------------- ----------------------------------
EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED
OUTSTANDING AIRCRAFT OUTSTANDING AIRCRAFT
BALANCE VALUE LTV BALANCE VALUE LTV
DATE (MILLIONS) (MILLIONS) RATIO (MILLIONS) (MILLIONS) RATIO
---- ----------- ---------- ----- ----------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
............................. $ $ % $ $ %
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
.............................
</TABLE>
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<PAGE> 89
<TABLE>
<CAPTION>
AIRCRAFT MANUFACTURER'S SERIAL AIRCRAFT MANUFACTURER'S SERIAL
NUMBER 76 NUMBER 81
------------------------------------ ------------------------------------
EQUIPMENT EQUIPMENT
NOTE ASSUMED NOTE ASSUMED
OUTSTANDING AIRCRAFT OUTSTANDING AIRCRAFT
BALANCE VALUE LTV BALANCE VALUE LTV
DATE (MILLIONS) (MILLIONS) RATIO (MILLIONS) (MILLIONS) RATIO
---- ----------- ---------- ------- ----------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
.......................... $ $ % $ $ %
..........................
..........................
..........................
..........................
..........................
..........................
..........................
..........................
..........................
..........................
</TABLE>
LIMITATION OF LIABILITY
The Equipment Notes will not be obligations of, or guaranteed by, AWA,
Holdings, the Owner Participants or the Trust Company. 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, the Trust Company 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.
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
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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, AWA 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) thirty 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 AWA fails to pay any installment of Basic Rent 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 AWA 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 AWA 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 AWA. 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 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 Aircraft, 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 Aircraft, 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 AWA. 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
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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 Aircraft 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 Aircraft; 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 or other period, (iii) AWA's assumption
during such 60-day or other 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 AWA, subject to the terms of such Lease. Any Aircraft sold in
the exercise of such remedies will be free and clear of any rights of those
parties, including the rights of AWA under the Lease with respect to such
Aircraft. (Indentures, Section 4.04; Leases, Section 18)
If the Equipment Notes issued in respect of one or more Aircraft are in
default and the Equipment Notes issued in respect of the remaining Aircraft are
not in default, no remedies will be exercisable under the applicable Indentures
with respect to such remaining Aircraft.
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 AWA that it will not take any action
contrary to AWA's rights under the related Lease, including the right of AWA to
possession and use and quiet enjoyment of the related Aircraft, 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
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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 Aircraft placed in service prior to the
enactment of the Bankruptcy Reform Act contains such a written statement.
Milbank, Tweed, Hadley & McCloy, counsel to the Underwriter, has advised
the Indenture Trustees that, if AWA 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. This opinion is subject to certain
qualifications and assumptions, including the assumption that AWA 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 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 Aircraft
which may be subleased by AWA. The opinion of Milbank, Tweed, Hadley & McCloy
will not address the possible substitution or replacement of Aircraft 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 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 Aircraft is owned by the related Owner Trustee in trust, such
Aircraft 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 Aircraft. 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 any partner
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.
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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 Aircraft and the return to the related Owner Trustee of the
related Aircraft 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 AWA, (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 AWA 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
AWA 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, AWA 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 AWA to such first person).
Under certain circumstances AWA is required to counter-indemnify the Original
Lessee for indemnities owing by the 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 Aircraft. Each Owner
Trustee indemnifies the Indenture Trustee for certain losses, claims and other
matters to the extent not reimbursed by AWA; 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 AWA 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 AWA 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, partner, 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 related
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 Aircraft 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
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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 is leased by an Owner Trustee to AWA under the relevant
Lease.
TERMS AND RENTALS
Each Aircraft is leased separately under its respective Lease for a term
commencing on the date of the delivery of such Aircraft to the Original Lessee
and expiring on July 5, 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 are payable semi-annually on each Basic Rent payment date.
(Leases, Section 4 and Exhibit C) AWA's obligations to pay rent and to make, or
cause to be made, other payments under each Lease are unsubordinated unsecured
obligations of AWA and will rank pari passu in right of payment with all other
unsubordinated unsecured indebtedness of AWA. The rental obligations will be
effectively subordinated to any secured indebtedness of AWA to the extent of the
value of the assets securing such indebtedness and would be effectively
subordinated to all obligations of AWA's subsidiaries (if any). AWA has no right
to purchase any Aircraft at the conclusion of the Term of such Lease.
NET LEASE; MINIMUM PAYMENTS
AWA's obligations in respect of each Lease of an Aircraft 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 Aircraft, 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))
REGISTRATION; MAINTENANCE; MODIFICATIONS
AWA 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. AWA is also obligated to the extent set forth in the related
Lease, to maintain, service, repair and overhaul the Aircraft (or cause the
Aircraft to be maintained, serviced, repaired and overhauled) in accordance with
good industry practice and so as to keep the Aircraft in as good a condition as
when delivered to AWA, ordinary wear and tear excepted, and in such condition as
is necessary to enable the airworthiness certification of such Aircraft 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 AWA or a Permitted Sublessee
is contesting in good faith such grounding. AWA 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. AWA will maintain, service, repair
and overhaul the Aircraft in the same manner and with the same care as used by
AWA with respect to similar aircraft owned by AWA 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 Aircraft in the
same manner and with the same care as used by the Permitted Sublessee with
respect to similar aircraft owned by such Permitted Sublessee. (Leases, Section
6(d) and 6(e))
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AWA 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 AWA or the Permitted Sublessee, except
to the extent AWA (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)) AWA must make (or cause to be made) all alterations,
modifications and additions to each Airframe and Engine necessary to meet the
applicable standards of the FAA or any other applicable governmental authority
having jurisdiction. AWA (or a Permitted Sublessee) may make other alterations,
modifications and additions to any Airframe or any Engine as AWA (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 or 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 or 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 or Engine as a result of such alterations, modifications or additions
vests in the Owner Trustee subject to certain exceptions. In certain
circumstances, AWA (or a Permitted Sublessee) is permitted to remove from an
Airframe or Engine parts which were added by AWA (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 or 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, AWA is
obligated to replace or cause to be replaced all parts incorporated or installed
in or attached to any Airframe or any Engine that become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or 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
AWA is permitted, subject to certain limitations, to sublease any Aircraft
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, AWA is permitted to transfer
possession of any Airframe or any Engine other than by sublease, including
transfers of possession by AWA 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 that three of the Aircraft may not be used in Hong Kong or the
People's Republic of China (Leases, Section 8(h)), there are no general
geographical restrictions on AWA's (or any Permitted Sublessee's) ability to
operate the Aircraft. The extent to which the relevant Indenture Trustee's lien
would be recognized in any Aircraft if such Aircraft 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
Aircraft subject thereto, it may be difficult, expensive and time-consuming to
obtain possession of such Aircraft, particularly when such Aircraft 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
Aircraft 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 Aircraft.
In addition, at the time of obtaining repossession of the Aircraft under
the related Lease or foreclosing on the lien on the Aircraft 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, AWA is required to
deliver engines
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attached to such Airframe of the same model and equivalent modification status
as the Engines or, at AWA'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 AWA's agreement in the related Lease, in the event AWA 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
AWA is required to maintain each Aircraft, Airframe and Engine free of any
liens, other than specified permitted liens including the respective rights of
AWA, 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 Aircraft 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 or 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 AWA'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 liens do not involve any material
danger of the sale, forfeiture or loss of such Aircraft, Airframe or 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 AWA (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, AWA 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
AWA, operating aircraft of similar size and engines. AWA 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 AWA, 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 Aircraft. (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 AWA (or a Permitted Sublessee) so long as no
Lease Event of Default or Lease Default exists. AWA (and any Permitted
Sublessee) may self-insure for such loss or damage to the extent of up to a $1
million deductible per Aircraft. (Leases, Sections 12(b) and 12(d))
In respect of each Aircraft, AWA 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
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insureds as their respective interests may appear under all insurance policies
required by the terms of the Lease with respect to such Aircraft. (Leases,
Sections 12(a) and 12(b))
AWA may not operate (or permit any Permitted Sublessee to operate) any
Aircraft in any area that is excluded from coverage by any insurance policy in
effect with respect to such Aircraft and required by the related Lease unless
the Aircraft is covered by a United States government indemnity. (Leases,
Section 6(c))
AWA'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, AWA
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 Aircraft for such Renewal Term as determined
in accordance with the related Lease. (Leases, Section 20(i))
EVENTS OF LOSS
If an Event of Loss occurs with respect to any Airframe or any Airframe and
any Engines then installed thereon, AWA is obligated either (i) to replace such
Airframe or Airframe and Engines or (ii) to pay to the related Owner Trustee the
applicable Stipulated Loss Value, as adjusted, together with certain additional
amounts. If AWA elects to replace such Airframe or Airframe and Engines, it must
do so not later than the 120th day after the related Event of Loss, with an
airframe or airframe and engine(s), 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 airframe or airframe
and engines prior to the Event of Loss, assuming maintenance thereof in
accordance with the related Lease. If AWA elects to pay the Stipulated Loss
Value for such Airframe or Airframe and Engines, AWA 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 or Airframe and Engines, the Lease for such Aircraft shall
terminate and the obligation of AWA 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, AWA 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 or Engine means
any of the following events with respect thereto:
(a) loss of such property or the use thereof due to theft or disappearance
for the period set forth in the relevant Lease;
(b) destruction or damage of such property that renders repair uneconomic
or such property permanently unfit for normal use by AWA (or a
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 Owner Trustee for ten days or more but
excluding requisition for use or hire which does not involve
requisition of title;
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(e) the condemnation, confiscation, appropriation, seizure or requisition
of the use of 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 AWA 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 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 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 Aircraft, Airframe or Engine in
the normal course of AWA's (or a Permitted Sublessee's) business of
air transportation of passengers shall have been prohibited for a
period of six consecutive months, unless AWA (or a Permitted
Sublessee), prior to the expiration of such six-month period, has
undertaken and is diligently carrying forward all steps which are
necessary or desirable to permit normal use of such item of equipment
by AWA (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, AWA 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 Aircraft. In addition,
under certain circumstances AWA 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
Aircraft. (Leases, Sections 10 and 13)
LEASE EVENTS OF DEFAULT
The Lease Events of Default include, among other things, (i) failure by AWA
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 AWA has received written demand therefor by the party entitled thereto
(provided that failure to pay amounts owed under certain related documents shall
not constitute a Lease Event of Default unless the Owner Trustee or the Owner
Participant delivers notice to AWA that such failure shall constitute a Lease
Event of Default); (ii) failure by AWA 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 AWA under the related Refunding Agreement and certain related documents
or in any certificate furnished by AWA 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 AWA; (v) AWA'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
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business as, or cessation of a preponderance of its business to be, that of a
commercial passenger Certificated Air Carrier and (vi) the failure of AWA to
obtain and maintain (or cause to be obtained and maintained) insurance on or in
respect of any Aircraft in accordance with the provisions of the relevant Lease,
or the operation of any Aircraft outside of the scope or in violation of the
terms of such insurance. (Leases, Section 17) The Leases require AWA 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 Aircraft. Such remedies
include the right to repossess such Aircraft, to sell or re-lease such Aircraft
free and clear of AWA's rights and retain the proceeds and to require AWA to pay
liquidated damages as computed in accordance with such Lease. (Leases, Section
18)
SECTION 1110
In each Lease, AWA 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 AWA, whereby
such Owner Trustee seeks recovery of possession of the Aircraft 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 Aircraft, the scheduled basic rent in respect
of such Aircraft payable semi-annually for the Term of the related Lease.
"Basic Term" means, for any Aircraft, a term commencing on the date of
delivery of such Aircraft to the 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, 1998.
"Permitted Sublessee" means any sublessee permitted under a Lease from time
to time.
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"Renewal Rent" means the rent payable during the Renewal Term for any
Aircraft pursuant to the related Lease.
"Renewal Term" means the period following the end of the Basic Term if AWA
has exercised its renewal option for such Aircraft pursuant to the related
Lease.
"Supplemental Rent" means all amounts, liabilities and obligations (other
than Basic Rent or Renewal Rent) which AWA 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
AWA has exercised its renewal option for such Aircraft pursuant to such Lease,
the Renewal Term.
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.
Three Aircraft securing the obligations under the three related Indentures
are subject to Hong Kong Cross-Border Lease financings with terms expiring in
2006.
Under the terms of each of the Cross-Border Lease financings, title to the
relevant Aircraft is held by the relevant Owner Trustee as assignee of the title
holder of the Aircraft, which, under a hire purchase agreement, has been hired
by the original title holder to a Hong Kong entity acting as the Cross-Border
Lessor of such Aircraft. In summary, the Hong Kong lease financing documentation
provides that, subject to various terms and conditions, the Cross-Border Lessor
has the right to acquire title to the Aircraft from that relevant Owner Trustee
upon the termination of the hire purchase agreement. The relevant documents
further provide that the relevant Owner Trustee, as assignee of the Cross-Border
Lessee, in each of the Hong Kong transactions can concurrently re-acquire title
to the relevant Aircraft from the Cross-Border Lessor, if such lessor exercises
its option to acquire title to the relevant Aircraft upon the termination of the
hire purchase agreement, or the Owner Trustee, as assignee of the title holder
of the Aircraft, can retain title if the Cross-Border Lessor does not or cannot
exercise its option to acquire the Aircraft upon termination of the hire
purchase agreement. The rights of the Cross-Border Lessee under each of these
financings have been assigned to the relevant Owner Trustees. Under the terms of
the financing, the Owner Trustee, as assignee of the Cross-Border Lessee, has
the right to cause the termination of such cross-border financing upon the
occurrence and continuance of a Lease Event of Default under the related U.S.
Lease and the exercise of remedies under the U.S. Lease (to the extent not
stayed). By virtue of an agreed defeasance arrangement, the monetary obligations
of the Cross-Border Lessees under the Hong Kong Cross-Border Leases have been
assumed by certain financial institutions or other parties. The relevant Owner
Trustee's right to take title to the Aircraft free of the Cross-Border Lease
financing is not conditioned upon the payment of any sum by any such parties. In
addition, the relevant Cross-Border Lessor and the partners therein have
expressly agreed that, after giving effect to the provisions of the Cross-Border
Lease financing documentation, they shall not have any right to retain or assert
any interest in the relevant Aircraft upon the termination of the relevant
Cross-Border Lease financing.
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 partner therein
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 partner therein, 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 clearing of title to such Aircraft
free of the Cross-Border Lease financing could occur. Such a delay might impede
the ability of an Indenture Trustee to realize upon the Aircraft collateral
securing the related Equipment Notes.
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<PAGE> 101
Legal opinions from Hong Kong and English counsel (based on certain
assumptions and qualifications) will be given to the effect that upon the
occurrence of an insolvency, bankruptcy, liquidation or any other similar event
with respect to the Cross-Border Lessor or any partner therein, neither the
Cross-Border Lessor nor any partner therein nor any trustee in bankruptcy,
liquidator, receiver or any other similar official in relation to the
Cross-Border Lessor or any partner therein would be entitled to acquire and
retain title to the relevant Aircraft. 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 Hong Kong or England would
not find differently, that such opinions would prove to be correct or that the
law of another jurisdiction would not apply. In this regard, Hong Kong counsel
advises that the Sino-British Joint Declaration on the future of Hong Kong
provides that the laws of Hong Kong in force on June 30, 1997 will be maintained
except for laws that contravene the Basic Law. Hong Kong counsel will be giving
an opinion that, in their view, the Basic Law does not contain any provision
which would be contravened by any provision of Hong Kong law relevant to their
opinion referred to above, but that this is a matter for interpretation by the
Standing Committee of the National People's Congress of the People's Republic of
China, in which the power of interpretation of the Basic law is vested.
In connection with the realization by the Indenture Trustee of its security
interest in an Aircraft subject to a Cross-Border Lease Financing, it may be
desirable to have the related Cross-Border Leases terminated.
The information set forth above concerning Cross-Border Lease financings
was provided by GPA and AWA takes no responsibility for the accuracy thereof.
THE REFUNDING AGREEMENTS
TRANSFER OF OWNER PARTICIPANT INTERESTS
Subject to certain restrictions, the Owner Participant may transfer its
beneficial interest in the relevant Owner Trust. (Refunding Agreements, Section
10)
REGISTRATION OF AIRCRAFT
The Aircraft have been registered under the Federal Aviation Act in the
name of the relevant Owner Trustee. AWA 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)
100
<PAGE> 102
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 AWA ("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, estates the income of which is
subject to U.S. federal income taxation regardless of its source or a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States fiduciaries have
authority to control all substantial decisions of the trust ("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.
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<PAGE> 103
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.
EFFECT OF SUBORDINATION OF SUBORDINATED CERTIFICATEHOLDERS
If any of the Class B Trust, the Class C Trust or the Class D 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
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 and will be long-term capital gain or loss if the Certificate has been
held for more than one year.
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. Regulations proposed by the IRS on
April 15, 1996, if finalized in their current form, would modify the
102
<PAGE> 104
certification requirements described in clause (iii) above with respect to
certain payments after December 31, 1997. AWA 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 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 AWA 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.
103
<PAGE> 105
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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<PAGE> 106
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 an administrative exemption to the
Underwriter, 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 or the Class D 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 or Class D 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 AND CLASS D CERTIFICATES
The Class B Certificates, Class C Certificates and Class D 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 or D 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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<PAGE> 107
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated , 1997 (the "Underwriting Agreement") among AWA, GPA, a U.S.
domiciled subsidiary of GPA and Morgan Stanley & Co. Incorporated (the
"Underwriter"), the Underwriter has agreed to purchase from the Trusts, at the
price set forth on the cover page of this Prospectus, Class A Certificates,
Class B Certificates, Class C Certificates and Class D Certificates in the
initial aggregate principal amounts of $ , $ , $ and
$ , respectively.
The Underwriting Agreement provides that the obligations of the Underwriter
to pay for and accept delivery of the Certificates is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is obligated to take and pay for all of the Certificates to be
purchased by it if any are taken.
The Underwriter initially proposes 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 Underwriter 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 Underwriter.
<TABLE>
<CAPTION>
PASS THROUGH CONCESSION REALLOWANCE
CERTIFICATE DESIGNATIONS TO DEALERS CONCESSION
- ------------------------ ---------- -----------
<C> <C> <C>
Class A % %
Class B
Class C
Class D
</TABLE>
In connection with the sale of Certificates, the Underwriter may be deemed
to have received compensation from AWA 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 Underwriter sells the Certificates to or through dealers,
such dealers may receive commissions from the Underwriter and/or commissions
(which may be changed from time to time) from the purchasers for whom it acts 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 AWA, on the one hand, and GPA and
a GPA subsidiary party thereto, on the other hand, will, severally and not
jointly, indemnify the Underwriter against certain liabilities, including
liabilities under applicable securities laws or will contribute to payments the
Underwriter may be required to make in respect thereof. In addition GPA and such
subsidiary will reimburse the Underwriter for certain of its expenses incurred
in connection with the offering of the Certificates, including certain fees and
expenses of counsel for the Underwriter.
The Certificates are new securities for which there currently is no market.
AWA does not intend to apply for listing of the Certificates on a national
securities exchange, but has been advised by the Underwriter that it currently
intends to make a market in the Certificates. The Underwriter is not 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 the Underwriter. Accordingly,
no assurance can be given as to the development or liquidity of any market for
the Certificates.
The Underwriter and its affiliates have provided or are currently providing
investment banking and other advisory or financial services to AWA and GPA and
certain of their respective affiliates for which they receive customary
compensation, and may continue to provide such services in the future.
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<PAGE> 108
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+4"). 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.
In order to facilitate the offering of the Certificates, the Underwriter
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Certificates. Specifically, the Underwriter may overallot in
connection with the offering, creating a short position in the Certificates for
its own account. In addition, to cover overallotments or to stabilize the price
of the Certificates, the Underwriter may bid for, and purchase, the Certificates
in the open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing the
Certificates in the offering, if the syndicate repurchases previously
distributed Certificates in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Certificates above independent market
levels. The Underwriter is not required to engage in these activities, and may
end any of these activities at any time.
LEGAL MATTERS
The validity of the Certificates offered hereby will be passed upon for AWA
by Andrews & Kurth L.L.P., Houston, Texas, and for the Underwriter 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 AWA. The respective counsel for AWA and
the Underwriter 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.
EXPERTS
The financial statements and financial statement schedule of AWA as of and
for the years ended December 31, 1996 and 1995, the period August 26, 1994
through December 31, 1994, and the period January 1, 1994 through August 25,
1994, have been included and incorporated by reference 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 and for the years ended December
31, 1996 and 1995, the period August 26, 1994 through December 31, 1994, and the
period January 1, 1994 through August 25, 1994 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 March 26, 1997 in the case of BK, March 19, 1997 in the
case of AISI and March 31, 1997 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.
107
<PAGE> 109
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CONDENSED FINANCIAL STATEMENTS AS OF MARCH 31, 1997
Condensed Balance Sheets as of March 31, 1997 (Unaudited)
and December 31, 1996..................................... F-2
Condensed Statements of Income for the three months ended
March 31, 1997 and 1996 (Unaudited)....................... F-3
Condensed Statements of Cash Flows for the three months
ended March 31, 1997 and 1996 (Unaudited)................. F-4
Notes to Condensed Financial Statements..................... F-5
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996
Independent Auditors' Report................................ F-7
Balance Sheets as of December 31, 1996 and 1995............. F-8
Statements of Income for the years ended December 31, 1996
and 1995, the period August 26, 1994 through December 31,
1994, and the period January 1, 1994 through August 25,
1994...................................................... F-9
Statements of Cash Flows for the years ended December 31,
1996 and 1995, the period August 26, 1994 through December
31, 1994, and the period January 1, 1994 through August
25, 1994.................................................. F-10
Statements of Stockholder's Equity for the years ended
December 31, 1996 and 1995, the period August 26, 1994
through December 31, 1994, and the period January 1, 1994
through
August 25, 1994........................................... F-11
Notes to Financial Statements............................... F-12
</TABLE>
F-1
<PAGE> 110
AMERICA WEST AIRLINES, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 136,323 $ 137,499
Short-term investments.................................... 29,385 39,131
Accounts receivable, less allowance for doubtful accounts
of $3,056 in 1997 and $3,091 in 1996................... 95,019 106,215
Expendable spare parts and supplies, less allowance for
obsolescence of $1,911 in 1997 and $1,713 in 1996...... 21,735 21,423
Prepaid expenses.......................................... 56,917 47,545
---------- ----------
Total current assets.............................. 339,379 351,813
---------- ----------
Property and equipment:
Flight equipment.......................................... 704,346 669,654
Other property and equipment.............................. 112,749 107,993
Equipment purchase deposits............................... 68,355 56,665
---------- ----------
885,450 834,312
Less accumulated depreciation and amortization............ 189,265 163,718
---------- ----------
Total property and equipment...................... 696,185 670,594
---------- ----------
Other assets:
Restricted cash........................................... 28,638 26,433
Reorganization value in excess of amounts allocable to
identifiable assets, net............................... 435,789 447,044
Deferred income taxes..................................... 74,700 74,700
Other assets, net......................................... 27,391 27,093
---------- ----------
Total other assets................................ 566,518 575,270
---------- ----------
$1,602,082 $1,597,677
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt...................... $ 44,211 $ 46,238
Accounts payable.......................................... 132,621 115,458
Air traffic liability..................................... 232,984 214,056
Accrued compensation and vacation benefits................ 26,269 30,085
Accrued taxes............................................. 46,470 72,047
Other accrued liabilities................................. 45,307 44,836
---------- ----------
Total current liabilities......................... 527,862 522,720
---------- ----------
Long-term debt, less current maturities..................... 333,685 330,148
Deferred credits and other liabilities...................... 117,153 122,029
Commitments and contingencies
Stockholder's equity:
Common Stock $.01 par value. Authorized, issued and
outstanding; 1,000 shares.............................. -- --
Additional paid-in capital................................ 539,301 552,643
Retained earnings......................................... 84,081 70,137
---------- ----------
Total stockholder's equity........................ 623,382 622,780
---------- ----------
$1,602,082 $1,597,677
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
F-2
<PAGE> 111
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Operating revenues:
Passenger................................................. $435,540 $387,802
Cargo..................................................... 12,756 10,757
Other..................................................... 13,891 14,591
-------- --------
Total operating revenues.......................... 462,187 413,150
-------- --------
Operating expenses:
Salaries and related costs................................ 101,017 94,702
Aircraft rents............................................ 54,932 47,272
Other rents and landing fees.............................. 30,816 26,567
Aircraft fuel............................................. 69,116 49,176
Agency commissions........................................ 38,312 32,599
Aircraft maintenance materials and repairs................ 31,312 27,025
Depreciation and amortization............................. 12,077 13,232
Amortization of excess reorganization value............... 6,255 6,549
Other..................................................... 84,887 81,710
-------- --------
Total operating expenses.......................... 428,724 378,832
-------- --------
Operating income............................................ 33,463 34,318
-------- --------
Nonoperating income (expenses):
Interest income........................................... 4,240 3,170
Interest expense.......................................... (12,081) (12,268)
Other, net................................................ 296 200
-------- --------
Total nonoperating expenses, net.................. (7,545) (8,898)
-------- --------
Income before income taxes.................................. 25,918 25,420
-------- --------
Income taxes................................................ 11,974 11,693
-------- --------
Net income.................................................. $ 13,944 $ 13,727
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
F-3
<PAGE> 112
AMERICA WEST AIRLINES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 13,944 $ 13,727
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 12,077 13,232
Amortization of capitalized maintenance................ 14,434 6,602
Amortization of excess reorganization value............ 6,255 6,549
Amortization of deferred credits....................... (2,793) (2,901)
Other.................................................. 1,131 520
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net........... 11,196 (29,622)
Decrease (increase) in spare parts and supplies, net...... (312) 244
Increase in prepaid expenses.............................. (9,372) (4,852)
Decrease (increase) in other assets, net.................. 2,497 (2,341)
Increase in accounts payable.............................. 17,163 11,004
Increase in air traffic liability......................... 18,928 67,936
Decrease in accrued compensation and vacation benefits.... (3,816) (19,570)
Decrease in accrued taxes................................. (25,577) (430)
Increase in other accrued liabilities..................... 471 121
Decrease in other liabilities............................. (2,564) (1,542)
-------- --------
Net cash provided by operating activities......... 53,662 58,677
Cash flows from investing activities:
Purchases of property and equipment....................... (41,062) (32,795)
Decrease in short-term investments........................ 9,746
Other..................................................... 91 (69)
-------- --------
Net cash used in investing activities............. (31,225) (32,864)
Cash flows from financing activities:
Repayment of debt......................................... (10,271) (15,812)
Repurchase of warrants.................................... (13,342) --
Issuance of common stock.................................. -- 2,174
-------- --------
Net cash used in financing activities............. (23,613) (13,638)
-------- --------
Net increase (decrease) in cash and cash equivalents........ (1,176) 12,175
-------- --------
Cash and cash equivalents at beginning of period............ 137,499 224,367
-------- --------
Cash and cash equivalents at end of period.................. $136,323 $236,542
======== ========
Cash, cash equivalents, and short-term investments at end of
period.................................................... $165,708 $236,542
======== ========
</TABLE>
See accompanying notes to condensed financial statements.
F-4
<PAGE> 113
AMERICA WEST AIRLINES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
1. BASIS OF PRESENTATION
The unaudited condensed financial statements included herein have been
prepared by America West Airlines, Inc., ("AWA" or the "Company"), a
wholly-owned subsidiary of America West Holdings Corporation ("Holdings"),
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 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, 1996.
2. INCOME TAXES
The Company recorded income tax expense as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current taxes:
Federal................................................... $ 544 $ 364
State..................................................... 488 326
------- -------
1,032 690
Deferred taxes.............................................. -- --
Income tax expense allocable to reorganization items........ 10,942 11,003
------- -------
Income tax expense.......................................... $11,974 $11,693
======= =======
</TABLE>
As reflected in the above table, for the three months ended March 31, 1997
and 1996, income tax expense pertains both to income from operations as well as
to certain adjustments necessitated by the Company's emergence from bankruptcy
in 1994 and the resultant fresh start adjustments to the Company's financial
statements. 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.
3. SUPPLEMENTAL INFORMATION TO CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Cash paid for interest and income taxes:
Interest, net of amounts capitalized ($606 in 1996)....... $10,612 $13,312
Income taxes.............................................. 40 16
Non-cash financing activities:
Notes payable issued for equipment purchase deposits...... 11,690 7,814
</TABLE>
F-5
<PAGE> 114
4. WARRANTS
In March 1997, the Company repurchased 1.91 million of its publicly traded
warrants from TPG Partners, L.P. and certain of its affiliates for approximately
$13.3 million.
5. COMMITMENTS AND CONTINGENCIES
(a) Leases
In February 1997, the Company entered into an agreement to lease one A320
aircraft for a term of 50 months with rents payable monthly.
(b) 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 potential 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 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.
F-6
<PAGE> 115
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
America West Airlines, Inc.:
We have audited the accompanying balance sheets of America West Airlines,
Inc. as of December 31, 1996 and 1995, and the related statements of income,
cash flows and stockholder's equity for the years ended December 31, 1996 and
1995, the period August 26, 1994 through December 31, 1994, and the period
January 1, 1994 through August 25, 1994. 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, 1996 and 1995, and the results of its operations and its cash
flows for the years ended December 31, 1996 and 1995, the period August 26, 1994
through December 31, 1994, and the period January 1, 1994 through August 25,
1994, in conformity with generally accepted accounting principles.
As discussed in Note 13 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
February 28, 1997
F-7
<PAGE> 116
AMERICA WEST AIRLINES, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 137,499 $ 224,367
Short-term investments.................................... 39,131 --
Accounts receivable, less allowance for doubtful accounts
of $3,091 in 1996 and $2,515 in 1995.................... 106,215 69,094
Expendable spare parts and supplies, less allowance for
obsolescence of $1,713 in 1996 and $2,115 in 1995....... 21,423 28,643
Prepaid expenses.......................................... 47,545 43,315
---------- ----------
Total current assets............................... 351,813 365,419
---------- ----------
Property and equipment:
Flight equipment.......................................... 669,654 546,591
Other property and equipment.............................. 107,993 104,106
Equipment purchase deposits............................... 56,665 27,489
---------- ----------
834,312 678,186
Less accumulated depreciation and amortization............ 163,718 76,123
---------- ----------
670,594 602,063
---------- ----------
Other assets:
Restricted cash........................................... 26,433 31,694
Reorganization value in excess of amounts allocable to
identifiable assets, net................................ 447,044 489,045
Deferred income taxes..................................... 74,700 74,700
Other assets, net......................................... 27,093 25,788
---------- ----------
575,270 621,227
---------- ----------
$1,597,677 $1,588,709
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt...................... $ 46,238 $ 54,157
Accounts payable.......................................... 115,458 89,157
Air traffic liability..................................... 214,056 191,744
Accrued compensation and vacation benefits................ 30,085 41,616
Accrued taxes............................................. 72,047 34,359
Other accrued liabilities................................. 44,836 24,802
---------- ----------
Total current liabilities.......................... 522,720 435,835
---------- ----------
Long-term debt, less current maturities..................... 330,148 373,964
Deferred credits and other liabilities...................... 122,029 129,438
Commitments and contingencies
Stockholder's 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 in
1995.................................................... -- 12
Class B common stock, $.01 par value. Authorized 1,000
shares; issued and outstanding 1,000 shares in 1996;
Authorized 100,000,000 shares; issued and outstanding
44,141,330 shares in 1995............................... -- 441
Additional paid-in capital................................ 552,643 588,927
Retained earnings......................................... 70,137 61,632
---------- ----------
622,780 651,012
Less: cost of Class B common stock in treasury, 112,000
shares in 1995.......................................... -- (1,540)
---------- ----------
Total stockholder's equity......................... 622,780 649,472
---------- ----------
$1,597,677 $1,588,709
========== ==========
</TABLE>
See accompanying notes to financial statements.
F-8
<PAGE> 117
AMERICA WEST AIRLINES, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
REORGANIZED COMPANY ------------
-------------------------------------- PERIOD
PERIOD FROM FROM
YEAR ENDED DECEMBER 31, AUGUST 26 TO JANUARY 1 TO
----------------------- DECEMBER 31, AUGUST 25,
1996 1995 1994 1994
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenues:
Passenger.................................. $1,637,762 $1,452,261 $437,775 $ 882,140
Cargo...................................... 46,519 44,425 16,648 27,645
Other...................................... 55,245 53,956 15,343 29,243
---------- ---------- -------- ---------
Total operating revenues........... 1,739,526 1,550,642 469,766 939,028
---------- ---------- -------- ---------
Operating expenses:
Salaries and related costs................. 385,840 382,032 117,562 213,722
Aircraft rents............................. 202,237 173,571 54,983 105,547
Other rents and landing fees............... 111,947 108,264 35,839 68,163
Aircraft fuel.............................. 233,522 174,195 58,165 100,646
Agency commissions......................... 133,015 124,146 37,265 78,988
Aircraft maintenance materials and
repairs................................. 125,768 65,925 17,590 28,109
Depreciation and amortization.............. 52,937 49,083 15,538 56,694
Amortization of reorganization value in
excess of amounts allocable to
identifiable assets..................... 25,263 31,958 11,145 --
Restructuring and other nonrecurring
special charges......................... 65,098 10,500 -- --
Other...................................... 335,233 276,236 82,808 179,653
---------- ---------- -------- ---------
Total operating expenses........... 1,670,860 1,395,910 430,895 831,522
---------- ---------- -------- ---------
Operating income............................. 68,666 154,732 38,871 107,506
---------- ---------- -------- ---------
Nonoperating income (expenses):
Interest income............................ 12,861 15,045 3,834 470
Interest expense (contractual interest of
$44,747 for the period ended August 25,
1994)................................... (46,866) (58,598) (22,636) (33,998)
Gain (loss) on disposition of property and
equipment............................... 1,288 (2,734) (398) (1,659)
Reorganization expense, net................ -- -- -- (273,659)
Other, net................................. (1,456) (67) 65 131
---------- ---------- -------- ---------
Total nonoperating expenses, net... (34,173) (46,354) (19,135) (308,715)
---------- ---------- -------- ---------
Income (loss) before income taxes
and extraordinary items.......... 34,493 108,378 19,736 (201,209)
Income taxes................................. 24,883 53,608 11,890 2,059
---------- ---------- -------- ---------
Income (loss) before extraordinary
items............................ 9,610 54,770 7,846 (203,268)
Extraordinary items, net of tax.............. (1,105) (984) -- 257,660
---------- ---------- -------- ---------
Net income......................... $ 8,505 $ 53,786 $ 7,846 $ 54,392
========== ========== ======== =========
</TABLE>
See accompanying notes to financial statements.
F-9
<PAGE> 118
AMERICA WEST AIRLINES, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
REORGANIZED COMPANY COMPANY
---------------------------------------- ------------
PERIOD PERIOD
FROM FROM
AUGUST 26 JANUARY 1
YEAR ENDED DECEMBER 31, TO TO
------------------------ DECEMBER 31, AUGUST 25,
1996 1995 1994 1994
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 8,505 $ 53,786 $ 7,846 $ 54,392
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization.................... 52,937 49,083 15,538 56,694
Amortization of capitalized maintenance.......... 39,679 11,934 356 --
Amortization of reorganization value............. 25,263 31,958 11,145 --
Income taxes attributable to reorganization items
and other...................................... 23,091 52,913 11,854 --
Amortization of deferred credits................. (11,563) (10,952) (3,961) (2,966)
Nonrecurring special charge...................... 65,098 -- -- --
Reorganization items............................. -- -- -- 185,226
Extraordinary items.............................. 1,105 984 -- (257,660)
Other............................................ 2,099 7,199 1,576 1,276
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable, net.... (37,121) (11,172) 27,439 (18,769)
Decrease (increase) in expendable spare parts and
supplies, net.................................... (3,793) (4,819) 1,165 397
Decrease (increase) in prepaid expenses............ (1,467) (14,031) 4,371 1,284
Decrease (increase) in other assets, net........... (3,173) (7,312) (10,635) 12,971
Increase (decrease) in accounts payable............ 26,301 10,308 (17,289) (15,557)
Increase (decrease) in air traffic liability....... 22,312 64,388 (26,452) 30,510
Increase (decrease) in accrued compensation and
vacation benefits................................ (11,531) 25,840 (11,667) 15,739
Increase (decrease) in accrued taxes............... 37,688 7,298 (2,104) 25,999
Increase (decrease) in other accrued liabilities... 8,315 (663) (13,785) 67,429
Increase (decrease) in other liabilities........... (13,411) (6,314) 2,521 (14,749)
--------- --------- -------- ---------
Net cash provided by (used in) operating
activities................................ 230,334 260,428 (2,082) 142,216
--------- --------- -------- ---------
Cash flows from investing activities:
Purchases of property and equipment................ (155,742) (107,387) (14,658) (61,271)
Increase in short-term investments................. (39,131) -- -- --
Other.............................................. (4,082) (9) 600 334
--------- --------- -------- ---------
Net cash used in investing activities....... (198,955) (107,396) (14,058) (60,937)
--------- --------- -------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt..................... -- 29,300 -- 100,000
Repayment of debt.................................. (79,216) (137,421) (23,355) (173,699)
Issuance of common stock........................... 3,074 1,545 3 114,862
Debt issuance cost................................. -- (3,130) -- --
Acquisition of treasury stock...................... (23,964) (1,540) -- --
Acquisition of warrants............................ (18,141) -- -- --
--------- --------- -------- ---------
Net cash provided by (used in) financing
activities................................ (118,247) (111,246) (23,352) 41,163
--------- --------- -------- ---------
Net increase (decrease) in cash and cash
equivalents............................... (86,868) 41,786 (39,492) 122,442
--------- --------- -------- ---------
Cash and cash equivalents at beginning of period..... 224,367 182,581 222,073 99,631
--------- --------- -------- ---------
Cash and cash equivalents at end of period........... $ 137,499 $ 224,367 $182,581 $ 222,073
========= ========= ======== =========
Cash, cash equivalents and short-term investments at
end of period...................................... $ 176,630 $ 224,367 $182,581 $ 222,073
========= ========= ======== =========
</TABLE>
See accompanying notes to financial statements.
F-10
<PAGE> 119
AMERICA WEST AIRLINES, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995, THE PERIOD AUGUST 26 THROUGH
DECEMBER 31, 1994,
AND THE PERIOD JANUARY 1 THROUGH AUGUST 25, 1994
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DEFERRED
COMPENSATION
AND NOTES
RECEIVABLE --
CONVERTIBLE CLASS A CLASS B ADDITIONAL RETAINED CLASS B EMPLOYEE
PREFERRED COMMON COMMON COMMON PAID-IN EARNINGS/ TREASURY STOCK
STOCK STOCK STOCK STOCK CAPITAL (DEFICIT) STOCK PURCHASE PLANS
----------- ------- ------- ------ ---------- --------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994.......... $ 18 $ -- $ -- $6,323 $197,010 $(438,626) $ -- $(18,987)
---- ---- ----- ------ -------- --------- -------- --------
Issuance of 336,277 shares of common
stock pursuant to convertible
preferred stock dividends......... -- -- -- 84 2,932 -- -- --
Employee stock purchase plan:
Cancellation of 7,678 shares of
common stock at:
$1.19-$4.03 per share........... -- -- -- (2) (49) -- -- 43
Deferred compensation........... -- -- -- -- (1) -- -- 606
Issuance of 108,825 shares of common
stock pursuant to exercise of
stock options..................... -- -- -- 27 166 -- -- --
Net income.......................... -- -- -- -- -- 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 -- --
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 -- -- --
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 -- -- --
---- ---- ----- ------ -------- --------- -------- --------
Issuance of common stock............ -- -- -- -- 100 -- -- --
Net income.......................... -- -- -- -- -- 7,846 -- --
---- ---- ----- ------ -------- --------- -------- --------
BALANCE AT DECEMBER 31, 1994........ -- 12 439 -- 587,149 7,846 -- --
---- ---- ----- ------ -------- --------- -------- --------
Issuance of 4,057 shares and 170,667
shares of common stock pursuant to
the exercise of stock warrants and
stock options..................... -- -- 2 -- 1,543 -- -- --
Issuance of 30,334 shares of
restricted stock.................. -- -- -- -- 235 -- -- --
Acquisition of 112,000 shares of
treasury stock at:
$13.63-$14.00 per share........... -- -- -- -- -- -- (1,540) --
Net income.......................... -- -- -- -- -- 53,786 -- --
---- ---- ----- ------ -------- --------- -------- --------
BALANCE AT DECEMBER 31, 1995........ -- 12 441 -- 588,927 61,632 (1,540) --
---- ---- ----- ------ -------- --------- -------- --------
Issuance of 12,725 shares and
314,001 shares of common stock
pursuant to the exercise of stock
warrants and stock options........ -- -- 3 -- 3,071 -- -- --
Issuance of 158,000 shares of
restricted stock.................. -- -- 2 -- 2,761 -- -- --
Acquisition and issuance of treasury
stock at:
$13.63-$21.88 per share........... -- -- -- -- 649 -- (23,569) --
Repurchase of 2,187,475 warrants at
$8.29 per warrant................. -- -- -- -- (18,141) -- -- --
Net income.......................... -- -- -- -- -- 8,505 -- --
Purchase of stock option from
Holdings.......................... -- -- -- -- (62,373) -- -- --
Contribution of capital by
Holdings.......................... -- -- -- -- 62,400 -- -- --
Reorganization as wholly-owned
subsidiary of Holdings............ -- (12) (446) -- (24,651) -- 25,109 --
---- ---- ----- ------ -------- --------- -------- --------
BALANCE AT DECEMBER 31, 1996........ $ -- $ -- $ -- $ -- $552,643 $ 70,137 $ -- $ --
==== ==== ===== ====== ======== ========= ======== ========
<CAPTION>
TOTAL
---------
<S> <C>
BALANCE AT JANUARY 1, 1994.......... $(254,262)
---------
Issuance of 336,277 shares of common
stock pursuant to convertible
preferred stock dividends......... 3,016
Employee stock purchase plan:
Cancellation of 7,678 shares of
common stock at:
$1.19-$4.03 per share........... (8)
Deferred compensation........... 605
Issuance of 108,825 shares of common
stock pursuant to exercise of
stock options..................... 193
Net income.......................... 54,392
Eliminate predecessor equity
accounts in connection with fresh
start............................. --
Eliminate employee stock
receivable........................ --
Record excess of reorganization
value over identifiable assets.... 668,702
Sale of 1,200,000 shares of Class A
common stock and 14,000,000 shares
of Class B common stock........... 114,862
Issuance of 29,925,000 shares of new
Class B common stock.............. --
---------
BALANCE AT AUGUST 25, 1994.......... 587,500
---------
Issuance of common stock............ 100
Net income.......................... 7,846
---------
BALANCE AT DECEMBER 31, 1994........ 595,446
---------
Issuance of 4,057 shares and 170,667
shares of common stock pursuant to
the exercise of stock warrants and
stock options..................... 1,545
Issuance of 30,334 shares of
restricted stock.................. 235
Acquisition of 112,000 shares of
treasury stock at:
$13.63-$14.00 per share........... (1,540)
Net income.......................... 53,786
---------
BALANCE AT DECEMBER 31, 1995........ 649,472
---------
Issuance of 12,725 shares and
314,001 shares of common stock
pursuant to the exercise of stock
warrants and stock options........ 3,074
Issuance of 158,000 shares of
restricted stock.................. 2,763
Acquisition and issuance of treasury
stock at:
$13.63-$21.88 per share........... (22,920)
Repurchase of 2,187,475 warrants at
$8.29 per warrant................. (18,141)
Net income.......................... 8,505
Purchase of stock option from
Holdings.......................... (62,373)
Contribution of capital by
Holdings.......................... 62,400
Reorganization as wholly-owned
subsidiary of Holdings............ --
---------
BALANCE AT DECEMBER 31, 1996........ $ 622,780
=========
</TABLE>
See accompanying notes to financial statements.
F-11
<PAGE> 120
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995, AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
America West Holdings Corporation ("Holdings"), a Delaware corporation,
became the holding company for America West Airlines, Inc. ("AWA" or the
"Company"), effective midnight, December 31, 1996. Holdings' primary business
activity is ownership of all the capital stock of AWA, the ninth largest
commercial airline carrier in the United States serving more than 90
destinations in the U.S., Canada and Mexico.
(a) Basis of Presentation
The accompanying financial statements include the accounts of America West
Airlines, Inc., a wholly-owned subsidiary of Holdings. 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, AWA, (the "Reorganized 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.
(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. (See Note 8, "Investments in Debt Securities.")
(c) Short-term Investments
Short-term investments consist of cash invested in certain debt securities
with original maturities greater than 90 days. The debt securities are
classified as held to maturity and are carried at amortized cost which
approximates fair value. (See Note 8, "Investments in Debt Securities.")
(d) 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.
(e) 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. No interest was capitalized in the year
ended December 31, 1996 due to the pending restructuring of the aircraft
purchase agreement with AVSA S.A.R.L., an affiliate of Airbus Industrie ("AVSA")
(See Note 10, "Commitments and Contingencies"). Interest capitalized for the
year ended December 31, 1995 was $2.7 million. 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.
F-12
<PAGE> 121
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The estimated useful lives for the Company's ground property and equipment
range from three to 12 years for owned property and equipment and to 30 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 11 to 22 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) Restricted Cash
Restricted cash includes cash deposits securing certain letters of credit.
(g) 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 maintenance 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 recorded.
(h) 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, 1996 and 1995 was $68.4 million and $43.1 million, respectively.
During the years ended December 31, 1996 and 1995, reductions in reorganization
value of $16.7 million and $50 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.
(i) 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.
(j) 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, 1996 and 1995, the
unamortized balance of the deferred credit was $95.6 million and $107.2 million,
respectively.
(k) 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
F-13
<PAGE> 122
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
expensed when the related revenue is recognized. Passenger traffic commissions
and related fees not yet recognized are included as a prepaid expense.
(l) 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.
(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) Advertising Costs
The Company expenses the costs of advertising as incurred. Advertising
expense for the years ended December 31, 1996, 1995 and for the combined period
ending December 31, 1994 was $26.6 million, $25.2 million and $23.8 million,
respectively.
(o) Reclassification
Certain reclassifications have been made in the prior year's financial
statements to conform them to the current presentation.
F-14
<PAGE> 123
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>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
SECURED
Notes payable, primarily fixed interest rates of 9.53% to
10.79%, averaging 10.32%, installments due 1999 through
2008...................................................... $234,494 $274,751
Borrowings under lines of credit, floating interest rates of
Prime +1% to three months LIBOR +4%, averaging 9.42%,
installments due through 1999. No available borrowings
remain.................................................... 8,277 14,794
Industrial development revenue bonds, variable interest rate
of 2.9% to 5.6%, averaging 3.83%, due 2016(a)............. 29,300 29,300
-------- --------
272,071 318,845
-------- --------
UNSECURED
10 3/4% Senior Notes, face amount of $50 million, interest
only payment until due in 2005(b)......................... 48,197 71,984
Notes payable, interest rates of 8% to 90-day LIBOR +3%,
averaging 8.39%, installments due through 2000............ 55,910 36,708
Other....................................................... 208 584
-------- --------
104,315 109,276
-------- --------
Total long-term debt.............................. 376,386 428,121
Less: current maturities.................................... 46,238 54,157
-------- --------
$330,148 $373,964
======== ========
</TABLE>
- ---------------
(a) The industrial development revenue 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 $42.1 million and a pledge of
$3.2 million in cash.
The interest rate varies weekly and from January 1, 1996 to December 31,
1996 ranged from 2.9% 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 letter of credit was extended in November 1996 for one year and is
subject to mandatory redemption under certain circumstances. The estimated
annual cost for the letter of credit is approximately $1.1 million.
(b) In June 1996, the Company prepaid $25 million in principal of the 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
F-15
<PAGE> 124
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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> <C>
2000............................................................. 105.375%
2001............................................................. 103.583%
2002............................................................. 101.792%
2003 and thereafter.............................................. 100.000%
</TABLE>
Secured financings totaling $272.1 million are collateralized by assets,
primarily aircraft and engines, with a net book value of $388.5 million at
December 31, 1996.
At December 31, 1996, the estimated maturities of long-term debt are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
1997........................................................ $ 46,238
1998........................................................ 43,210
1999........................................................ 70,430
2000........................................................ 28,000
2001........................................................ 20,720
Thereafter.................................................. 167,788
--------
$376,386
========
</TABLE>
Certain of the Company's long-term debt agreements contain minimum cash
balance requirements, leverage ratios, coverage ratios, limitations on
investments and restricted payments including cash dividends, and other
financial covenants with which the Company was in compliance at December 31,
1996.
3. CAPITAL STOCK
Effective midnight, December 31, 1996, AWA became a wholly owned subsidiary
of Holdings and each share of AWA Class A and Class B Common Stock and options
to purchase Class B Common Stock were exchanged for one share of Holdings Class
A or Class B Common Stock and options to purchase Class B Common Stock.
Holdings' Class B Common Stock is listed on the New York Stock Exchange.
On August 25, 1994, AWA issued approximately 10.4 million warrants to
purchase Class B Common Stock with an exercise price of $12.74 per share. The
warrants are exercisable by the holders any time before August 25, 1999 and 10.4
million shares of Class B Common Stock have been reserved for the exercise of
these warrants. In May 1996, approximately 2.2 million warrants were repurchased
by AWA for approximately $18 million. As of December 31, 1996, 17,054 warrants
have been exercised at $12.74 per share. Pursuant to their terms, as part of the
holding company formation transaction the AWA warrants became rights to acquire
shares of Holdings Class B Common Stock. AWA has made arrangements for the
issuance of Holdings Class B Common Stock upon the exercise of such warrants by
purchasing an option from Holdings to acquire such stock. AWA issued a $62.4
million note payable due December 31, 2005 with an interest rate of 11%.
Subsequently, Holdings made a capital contribution to AWA issuing a note
payable to AWA for $62.4 million due December 31, 2045 with an interest rate of
10 7/8%. AWA has the right on December 31, 2005 to repay all or a portion of the
then outstanding principal balance of its note payable by offsetting by an equal
amount the then outstanding principal balance of its note receivable and thus,
these notes have been offset in the accompanying financial statements in
accordance with applicable accounting standards.
F-16
<PAGE> 125
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. 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
pretax earnings to a maximum of $9,500 in 1996. The Company's matching
contribution is 50% of a participant's contributions up to 6% of the
participant's annual pretax earnings or 25% of a participant's contributions,
whichever is greater. The Company's contribution expense to the plan totaled
$5.9 million, $5.9 million and $3.8 million in 1996, 1995 and the combined 1994
period, respectively.
5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(a) Fair Value of Financial Instruments
Cash Equivalents and Short-term Investments
The carrying amount approximates fair value because of the short-term
maturity of these instruments.
Long-term Debt
At December 31, 1996 and 1995, the fair value of long-term debt was
approximately $379 million and $431 million, respectively, based on quoted
market prices for the same or similar debt including debt of comparable
remaining maturities.
(b) Fuel Price Risk Management
The Company is exposed to risk from fluctuating jet fuel prices. To manage
this risk, the Company implemented a fuel hedging program in late 1996.
Oversight of this program is the responsibility of the Fuel Hedge Committee
("FHC"), a group of the Company's senior officers, which sets acceptable levels
of risk and reviews hedging activities. Under the program, the Company may enter
into certain cap and swap transactions with approved counterparties for a period
not to exceed twelve months. Gains and losses on such transactions are recorded
as adjustments to fuel expense when the underlying fuel being hedged is used. As
of December 31, 1996, there were no transactions outstanding.
The Company is exposed to credit risks in the event any counterparty fails
to meet its obligations. The Company does not anticipate such non-performance as
counterparties are selected based on credit ratings, exposure to any one
counterparty is limited based on formal guidelines and the relative market
positions with such counterparty are monitored by the FHC.
(c) 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 AWA. These receivables are
short-term, generally being settled shortly after the sale.
F-17
<PAGE> 126
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES
The Company recorded income tax expense for the periods shown below
(exclusive of extraordinary items) as follows:
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
REORGANIZED COMPANY ------------
-------------------------------------- PERIOD
PERIOD FROM FROM
YEAR ENDED DECEMBER 31, AUGUST 26 TO JANUARY 1 TO
----------------------- DECEMBER 31, AUGUST 25,
1996 1995 1994 1994
--------- --------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current Taxes:
Federal............................... $ 943 $ 505 $ -- $1,869
State................................. 849 190 36 190
------- ------- ------- ------
Total current taxes........... 1,792 695 36 2,059
------- ------- ------- ------
Deferred taxes.......................... -- -- -- --
------- ------- ------- ------
Income taxes attributable to
reorganization items and other........ 23,091 52,913 11,854 --
------- ------- ------- ------
Total income tax expense...... $24,883 $53,608 $11,890 $2,059
======= ======= ======= ======
</TABLE>
With respect to the years ended December 31, 1996 and 1995 and the period
August 26, 1994 through 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%.
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 ($16.7 million for 1996) is applied to reduce the carrying
balance of the Company's reorganization value in excess of amounts allocable to
identifiable assets.
For the years ended December 31, 1996 and 1995, the Company recognized
income tax benefit of $918,000 and $984,000, respectively, arising from
extraordinary charges. For the periods January 1, 1994 through August 25, 1994
and August 26 through December 31, 1994, 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-18
<PAGE> 127
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>
PREDECESSOR
REORGANIZED COMPANY COMPANY
---------------------------------------- ------------
PERIOD FROM PERIOD FROM
YEAR ENDED DECEMBER 31, AUGUST 26 TO JANUARY 1 TO
------------------------ DECEMBER 31, AUGUST 25,
1996 1995 1994 1994
---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Income tax expense at U.S.
statutory rate................. $12,073 $37,932 $ 6,908 $19,758
State income taxes, net of
federal income tax benefit..... 1,984 4,505 1,663 190
Nondeductible amortization of
reorganization value in excess
of amounts allocable to
identifiable assets............ 8,842 11,188 3,901 --
Benefit of loss carryforwards.... -- -- -- (17,889)
Other, net....................... 1,984 (17) (582) --
------- ------- ------- -------
Total.................. $24,883 $53,608 $11,890 $ 2,059
======= ======= ======= =======
</TABLE>
As of December 31, 1996, the Company has available net operating loss,
business tax credit and alternative minimum tax credit carryforwards for Federal
income tax purposes of approximately $498.7 million, $12.7 million and $1.2
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 Section 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-19
<PAGE> 128
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Composition of Deferred Tax Items:
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. As of December 31, the
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>
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax liabilities:
Property and equipment, principally depreciation and
"fresh start" differences............................. $(111,989) $ (89,766)
Deferred tax assets:
Aircraft leases.......................................... 32,789 39,812
Reorganization expenses.................................. 21,356 23,591
Net operating loss carryforwards......................... 190,548 203,879
Tax credit carryforwards................................. 13,861 13,777
Other.................................................... 16,568 14,240
--------- ---------
Total deferred tax assets........................ 275,122 295,299
--------- ---------
Valuation allowance........................................ (88,433) (130,833)
--------- ---------
Net deferred tax asset........................... $ 74,700 $ 74,700
========= =========
</TABLE>
SFAS 109 requires a "more likely than not" criterion be applied when
evaluating the realizability of a deferred tax asset. In 1996 the Company
reduced the valuation allowance by $42.4 million from its 1995 balance
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. The remaining valuation allowance of $88.4 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-20
<PAGE> 129
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. 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
REORGANIZED COMPANY COMPANY
---------------------------------------- ------------
PERIOD FROM PERIOD FROM
YEAR ENDED DECEMBER 31, AUGUST 26 TO JANUARY 1 TO
------------------------ DECEMBER 31, AUGUST 25,
1996 1995 1994 1994
---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Non-cash transactions:
Notes payable issued to
seller...................... $26,112 $ 5,723 $ -- $ --
Accrued interest reclassified
to long-term debt......... -- 65 -- 5,563
Issuance of stock as success
bonus....................... -- -- -- 1,224
Equipment acquired through
capital leases.............. -- -- -- 138
Cash transactions:
Interest paid, net of amounts
capitalized.................... 37,555 50,293 11,262 29,253
Income taxes paid.............. 498 795 425 1,253
</TABLE>
Cash flows from reorganization items in connection with the Chapter 11
proceedings included interest received on cash accumulations of $3.7 million and
professional fees paid for services rendered of $23.6 million.
8. INVESTMENTS IN DEBT SECURITIES
Cash equivalents and short-term investments consist of highly liquid debt
instruments with original maturities of three months or less while short-term
investments consists of highly liquid debt instruments with original maturities
in excess of three months. The highly liquid debt instruments as of December 31
are classified as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Held to Maturity:
Debt securities issued by the U.S. Treasury and other U.S.
government agencies.................................. $ 36,973 $129,288
Bankers acceptances....................................... 49,141 37,686
Corporate debt securities................................. 90,418 20,466
Other debt securities..................................... 98 1,341
-------- --------
176,630 188,781
Cash...................................................... -- 35,586
-------- --------
Total cash, cash equivalents and short-term
investments..................................... $176,630 $224,367
======== ========
</TABLE>
9. EXTRAORDINARY GAINS AND LOSSES
In June 1996, the Company had an extraordinary loss of $1.1 million net of
an income tax benefit of $918,000 for the write-off of debt issuance cost
relating to the prepayment of $25 million of its 10 3/4% Senior Notes. In August
1995, the Company had an extraordinary loss of $984,000, net of a tax benefit of
$984,000 for the write-off of debt issuance cost, relating to the prepayment of
$48 million of its $123 million 11 1/4%
F-21
<PAGE> 130
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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.
10. COMMITMENTS AND CONTINGENCIES
(a) Leases
As of December 31, 1996, the Company had 82 aircraft under operating leases
with remaining terms ranging from five months 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
and maintenance reserve payments and provide 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, 1996, 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>
1997........................................................ $ 237,545
1998........................................................ 201,575
1999........................................................ 188,575
2000........................................................ 176,186
2001........................................................ 154,127
Thereafter.................................................. 920,002
----------
$1,878,010
==========
</TABLE>
Rent expense (excluding landing fees) was approximately $281 million, $251
million, $81 million and $154 million for the years ended December 31, 1996 and
1995, for the period August 26 through December 31, 1994, and the period January
1 through August 25, 1994, respectively.
Collectively, the operating lease agreements require security deposits with
lessors of $9.7 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, 1996 and 1995.
(b) Revenue Bonds
Special facility revenue 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 by the Company. Under the operating lease agreements, the
Company is required to make rental payments sufficient to pay principal and
interest when due on the bonds.
F-22
<PAGE> 131
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Pursuant to the agreement, payment of principal and interest at 8.3% on the
Series 1994A Bonds ends on January 1, 2006 while payment of principal and
interest at 8.2% on the Series 1994B Bonds ends on January 1, 1999. At December
31, 1996, the outstanding balance of Series 1994 Bonds was $16.1 million.
(c) Aircraft Acquisitions
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 provides
for the restructuring of 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 10 A319s), (iii) AVSA and the
manufacturer of the engines for the aircraft would agree to provide certain
financing support 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.
At December 31, 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% annual price escalation, the Company estimates such aggregate
net cost to be approximately $1.1 billion. The Company has the option to cancel
without cause up to five of these aircraft. If the Company exercised its
existing rights to cancel five 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 $850 million.
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 certain of the A320 fleet. Such engines have an
estimated aggregate cost of $42 million.
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>
1997........................................................ $ 63,134
1998........................................................ 106,218
1999........................................................ 264,707
2000........................................................ 297,368
2001........................................................ 328,207
----------
$1,059,634
==========
</TABLE>
At December 31, 1996, 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.
F-23
<PAGE> 132
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In November 1996, the America West Airlines 1996-1 Pass Through Trusts
issued $218.6 million of Pass Through Certificates, representing fractional
undivided interests in such trusts. The certificates were issued in connection
with the refinancing of eight Airbus A320 aircraft and three IAE V2500 spare jet
engines. The combined effective interest rate on the financing was 7.05%. The
proceeds of the transaction were used to refinance the indebtedness incurred by
the owners of the aircraft and engines leased to the Company. Under the
arrangements, the financial benefits of the transactions are shared among the
Company, the equity investors in leverage leases covering the aircraft and U.S.
subsidiaries of GPA Group plc ("GPA"), the original lessees under the
restructured leases. Benefit to the Company include the agreed termination of
arrangements with GPA pursuant to which GPA could cause the Company to lease up
to four aircraft under a put agreement over the balance of the decade and a
reduction in rental expense approximating $500,000 per year.
The Pass Through Certificates were issued by separate pass through trusts.
The equipment notes are secured by a security interest in the aircraft and
engines and an assignment of the Company's leases. Neither the equipment notes
nor the pass through certificates are direct obligations of, or guaranteed by,
the Company, and the corresponding debt and interest expense are not included in
the Company's consolidated financial statements.
(d) 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. As discussed in Note 13, "Restructuring
and Other Non-recurring Special Charges," the Company has recorded a liability
for loss contingencies in accordance with generally accepted accounting
principles.
11. 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 on August 25, 1994, (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 was terminated in September
1996. During 1996, GPA sold 900,000 shares of Class B Common Stock, and the
Company repurchased all of the outstanding warrants (discussed in (ii) above)
from GPA as part of the buy back program authorized by the Board of Directors.
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 TPG Partners, L.P. ("TPG"), Mesa Air
Group ("Mesa"), Continental Airlines, Inc. (" Continental") and Lehman Brothers,
Inc. ("Lehman"). The shares offered were purchased by the selling stockholders
in connection with AWA's emergence from bankruptcy in August 1994.
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 eight
F-24
<PAGE> 133
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
aircraft from GPA and the rental payments for such leases and the eight aircraft
refinanced under the America West Airlines 1996-1 Pass Through Trusts amount to
$62.4 million, $68 million, and $63.3 million for the twelve months ended
December 31, 1996, 1995 and 1994, respectively. As of December 31, 1996, the
Company was obligated to pay approximately $500 million under the GPA leases
which expire at various times through the year 2013.
As part of the Reorganization, both Continental and Mesa made an investment
in the Company, and the Company entered into Alliance agreements with
Continental and Mesa. Pursuant to a code-sharing agreement entered into with
Mesa 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 $3.5
million, $2.9 million and $2.5 million for the twelve months ended December 31,
1996, 1995 and 1994, respectively. In addition, the Company maintains agreements
with Continental related to code-sharing arrangements and ground handling
operations. The Company paid Continental approximately $21.7 million, $14
million and $2 million and also received approximately $13 million, $11 million
and $1 million in 1996, 1995 and 1994, respectively, from Continental for such
services.
12. RESTRUCTURING AND OTHER NONRECURRING SPECIAL CHARGES
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 (See Note 10, "Commitments and Contingencies"), 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. 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.
In December 1995, the Company recorded a $10.5 million restructuring
charge. 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.
13. CHAPTER 11 REORGANIZATION AND FRESH START REPORTING
Chapter 11 Reorganization
Upon the Company's emerging from bankruptcy on August 25, 1994, the
partners of AmWest Partners, L.P., a limited partnership which includes TPG;
Continental; and Mesa; together with Lehman and Fidelity Investments
("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.
The Plan of Reorganization 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
F-25
<PAGE> 134
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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.
As of December 31, 1996, distributions on $307.9 million of allowed general
unsecured claims have been made. Approximately 25.6 million shares of the
Company's Class B Common Stock and cash proceeds equivalent to an additional
783,936 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
JANUARY 1 TO
AUGUST 25, 1994
---------------
(IN THOUSANDS)
<S> <C>
Professional fees and other expenses directly related to the
Chapter 11 proceedings.................................... $ 31,959
Adjustments of assets and liabilities to fair value......... 166,829
Provisions for settlement of claims......................... 66,626
Reorganization success bonuses.............................. 11,956
Interest income............................................. (3,711)
---------
$ 273,659
=========
</TABLE>
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 expense on
property and equipment, increased amortization expense relating to
reorganization value in excess of amounts allocable to identifiable assets and
increased interest expense.
F-26
<PAGE> 135
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The effects of the Plan and fresh start reporting on the balance sheet at
the Effective Date are as follows:
<TABLE>
<CAPTION>
PREDECESSOR REORGANIZED
COMPANY COMPANY
----------- (B) --------------
(A) ISSUE OF (C)
AUGUST 25, DEBT DEBT AND FRESH START AUGUST 25,
1994 DISCHARGE STOCK ADJUSTMENTS 1994
----------- ---------- ---------- ----------- --------------
<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 STOCKHOLDER'S 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
Stockholder's 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 stockholder's equity
(deficiency)..................... (286,395) 257,660 114,362 501,873 587,500
---------- ---------- ---------- ---------- ----------
Total liabilities and stockholder's
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.
(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.
F-27
<PAGE> 136
AMERICA WEST AIRLINES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
During the reorganization period, pursuant to SOP 90-7, prepetition
liabilities were reported in 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 "Estimated 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.
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 are as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1996
Total operating revenues (a).................. $413,150 $463,949 $422,518 $439,909
Operating income (loss) (b)................... 34,318 62,083 (53,143) 25,408
Nonoperating expense, net..................... (8,898) (8,293) (8,377) (8,605)
Income tax (expense) benefit.................. (11,693) (24,268) 15,813 (4,735)
Net income (loss)................... 13,727 28,417 (45,707) 12,068
1995
Total operating revenues...................... $345,790 $399,916 $408,627 $396,309
Operating income (c).......................... 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.......................... 5,210 20,873 21,715 5,988
</TABLE>
- ---------------
(a) During the second quarter of 1996, operating revenues include an $8 million
adjustment arising from the reconciliation of estimated passenger revenues.
(b) During the third quarter of 1996, the Company recorded a nonrecurring
special charge of $65.1 million.
(c) During the fourth quarter of 1995, the Company recorded restructuring
charges of $10.5 million. See note 13 for more information.
F-28
<PAGE> 137
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........................ 60
11 1/4% Notes........................ 60
Adjusted Expected Distributions...... 20
Administration Expenses.............. 80
ADs.................................. 53
Aggregate LTV Collateral Amount...... 20
Aircraft............................. 2
Airframe............................. 98
Air Partners......................... 27
AISI................................. 10
Alliance Agreements.................. 60
America West......................... 6
America West Vacations............... 6
Appraisals........................... 29
Appraised Current Market Value....... 20
Appraisers........................... 10
ASM.................................. 6
Assumed Aggregate Aircraft Value..... 10
Assumed Aircraft Value............... 87
Average Life Date.................... 85
Aviation Safety Commission........... 28
AVSA................................. 44
AWA.................................. Cover
AWArd Pay............................ 49
Bankruptcy Code...................... 16
Base Rate............................ 77
Basic Agreement...................... Cover
Basic Law............................ 32
Basic Rent........................... 98
Basic Term........................... 98
BK................................... 10
Cash Collateral Account.............. 18
CASM................................. 38
Cede................................. 72
Certain Taxes and Fees............... 81
Certificate Account.................. 65
Certificate Owner.................... 72
Certificated Air Carrier............. 98
Certificateholders................... 14
Certificates......................... Cover
Class A Certificates................. Cover
Class A Trust........................ Cover
Class B Certificates................. Cover
Class B Trust........................ Cover
Class C Certificates................. Cover
Class C Trust........................ Cover
Class D Certificates................. Cover
Class D Trust........................ Cover
Class Exemptions..................... 104
Closing Date......................... 2
Code................................. 23
Commission........................... 3
</TABLE>
<TABLE>
<CAPTION>
DEFINED TERM PAGE
------------ ----
<S> <C>
Company.............................. 6
Continental.......................... 6
Controlling Party.................... 21
Convention........................... 86
Cross-Border Lease................... 99
Cross-Border Lessee.................. 99
Cross-Border Lessor.................. 99
Current Distribution Date............ 19
Definitive Certificates.............. 73
Distribution Date.................... 14
DOT.................................. 45
Downgrade Drawing.................... 18
DTC.................................. 72
DTC Participants..................... 73
Engine............................... 98
Equipment............................ 60
Equipment Notes...................... 2
Exculpated Person.................... 92
ERISA................................ 23
ERISA Plans.......................... 104
Event of Loss........................ 96
Exchange Act......................... 3
Expected Distributions............... 19
FAA.................................. 27
Federal Aviation Act................. 70
Fidelity............................. 60
Final Distributions.................. 22
Final Drawing........................ 77
Final Expected Distribution Date..... 13
Final Legal Distribution Date........ 14
Financial Institution................ 102
Global Certificates.................. 72
GPA.................................. 32
GPA Subs............................. 60
Holdings............................. 6
IAE.................................. 44
IBT.................................. 50
Indenture............................ 13
Indenture Event of Default........... 68
Indenture Trustee.................... 13
Indirect Participants................ 73
Intercreditor Agreement.............. 19
Interest Drawings.................... 17
Interest Period...................... 77
IRS.................................. 101
Lease................................ 2
Lease Default........................ 98
Lease Event of Default............... 68
Lease Payment Dates.................. 98
Lehman............................... 60
LIBOR................................ 77
Liquidity Event of Default........... 77
</TABLE>
I-1
<PAGE> 138
<TABLE>
<CAPTION>
DEFINED TERM PAGE
------------ ----
<S> <C>
Liquidity Expenses................... 80
Liquidity Facility................... 17
Liquidity Obligations................ 17
Liquidity Provider................... Cover
Long Settlement...................... 2
LTV Appraisal........................ 21
LTV Collateral Amount................ 21
LTV Ratio............................ 10
Make-Whole Amount.................... 85
MBA.................................. 10
Mesa................................. 6
Minimum Sale Price................... 22
Moody's.............................. 18
Newbridge............................ 56
NMB.................................. 50
NOL.................................. 44
Non-Performing Equipment Notes....... 18
Non-U.S. Certificateholder........... 102
Order................................ 55
Original Lessee...................... 34
Owner Participant.................... 15
Owner Trust.......................... 2
Owner Trust Agreement................ 83
Owner Trustee........................ 2
Pass Through Trust Agreements........ Cover
Performing Equipment Notes........... 18
Performing Note Deficiency........... 18
Permitted Sublessee.................. 98
PFCs................................. 52
Plan Asset Regulation................ 104
Plans................................ 23
Pool Balance......................... 66
Pool Factor.......................... 66
Prior Subleases...................... 61
PTC Event of Default................. 14
PTCE................................. 23
Put Termination Agreement............ 60
RASM................................. 40
Rating Agencies...................... 18
Record Date.......................... 14
Refunding Agreement.................. 13
Registration Statement............... 3
Regular Distribution Dates........... 64
Remaining Weighted Average Life...... 85
Renewal Rent......................... 99
Renewal Term......................... 99
</TABLE>
<TABLE>
<CAPTION>
DEFINED TERM PAGE
------------ ----
<S> <C>
Reorganization Plan.................. 54
Replacement Facility................. 76
Required Amount...................... 17
Review Commission.................... 27
RLA.................................. 55
Rules................................ 73
Scheduled Payments................... 64
Section 1110 Period.................. 18
Section 382 Limitation............... 44
Securities Act....................... 3
Series A Equipment Notes............. 2
Series B Equipment Notes............. 2
Series C Equipment Notes............. 2
Series D Equipment Notes............. 2
Shortfall Amounts.................... 102
SOP 90-7............................. 39
Special Distribution Date............ 65
Special Payment...................... 65
Special Payments Account............. 65
Standard & Poor's.................... 18
Stated Interest Rates................ 17
Subordinated Certificateholders...... 102
Subordinated Certificates............ 102
Subordinated Trusts.................. 102
Subordination Agent.................. 13
Supplemental Rent.................... 99
Term................................. 99
Threshold Rating..................... 24
TPG.................................. 27
TPG Partners......................... 27
TPG Parallel......................... 27
Treasury Yield....................... 85
Triggering Event..................... 15
Trust Company........................ 86
Trust Indenture Estate............... 84
Trust Property....................... 13
Trust Supplement..................... Cover
Trustee.............................. Cover
Trusts............................... Cover
TWU.................................. 50
UDC.................................. 58
U.S. Certificateholders.............. 101
U.S. Persons......................... 101
Underwriting Agreement............... 106
Underwriter.......................... 106
Underwriters Exemption............... 105
</TABLE>
I-2
<PAGE> 139
APPENDIX II -- AIRCRAFT APPRAISALS
AISI Letterhead
19 March 1997
Mr. Declan Treacy
GPA Group plc
GPA House
Shannon, Co. Clare
IRELAND
Subject: AISI Report No. A7D036BA2
AISA Short Form Sight Unseen Base Value Appraisal
Four A320-200 Aircraft
Reference: Morgan Stanley Fax Message dated 18 March 1997
Dear Mr. Treacy:
As requested, Aircraft Information Services, Inc. (AISI) is pleased to
offer GPA Group plc our opinion of the sight unseen half-life base value of your
four A320-200 aircraft 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 cast 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. AISI assumes average
condition unless otherwise specified in this report. "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.
AISI Letterhead footer
II-1
<PAGE> 140
19 March 1997
AISI File No. A7D036BA2
Page -2-
AISI defines a "current market value" or "fair 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 less volatile
than current market values and tend to diminish regularly with time. Base values
are normally inappropriate to determine near term values. AISI encourages the
use of current market 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 1
<TABLE>
<CAPTION>
HALF-LIFE
AIRCRAFT/ BASE VALUE
EQUIPMENT DATE OF MTOW 1997
TYPE S/N MANUFACTURE (LBS.) ENGINES U.S. DOLLARS
--------- --- ----------- ------- -------- ------------
<S> <C> <C> <C> <C> <C>
A320-200............. 66 Jul 89 162,000 V2500-A1 $28,600,000
A320-200............. 67 Jul 89 162,000 V2500-A1 $28,600,000
A320-200............. 76 Sep 89 162,000 V2500-A1 $28,820,000
A320-200............. 81 Sep 89 162,000 V2500-A1 $28,820,000
</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.
Bearden Signature
Fred E. Bearden
President
II-2
<PAGE> 141
BK Associates Letterhead
March 26, 1997
Mr. Declan Treacy
GPA Group plc
GPA House
Shannon, County 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 four Airbus A320-231
aircraft, each powered by International Aero Engines V2500-A1 engines
(Aircraft). 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 is as shown below.
<TABLE>
<CAPTION>
REGISTRATION SERIAL DATE CURRENT BASE
NUMBER NUMBER DELIVERED VALUE
- ------------ ------ --------- ------------
<C> <C> <C> <C>
N627AW 66 11/89 $27,670,000
N628AW 67 11/89 27,670,000
N629AW 76 11/89 27,670,000
N632AW 81 12/89 28,000,000
</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 for marketing.
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 and 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.
II-3
<PAGE> 142
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. 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 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.
LOGO
John F. Keitz
President
ISTAT Certified Senior Appraiser
II-4
<PAGE> 143
Morten Beyer Letterhead
March 31, 1997
Mr. Declan Treacy
GPA Group plc
Shannon, County Clare
Ireland
Dear Mr. Treacy:
Morten Beyer and Associates, Inc. (MBA) has been retained by GPA Group plc
(GPA) to set forth its opinion regarding the Current Base Value (CBV) of four
Airbus A320-200 series aircraft for the purposes of an upcoming transaction to
finance the four aircraft. The tail numbers and original delivery dates for the
four aircraft to be financed are: N627AW and N628AW delivered in November, 1989
and N629AW and N632AW delivered in December, 1989.
In determining the CBV of these aircraft, we did not inspect the aircraft
or their historical maintenance documentation. We made the following assumptions
regarding the specifications, condition and status of the aircraft. Such
assumptions are considered to be standard industry practice when more detailed
information is not readily available.
1. The aircraft is in good overall condition.
2. The overhaul status of the airframe, engines, landing gear and other
major components is the equivalent of mid-time/mid-life.
3. The aircraft is current as to Airworthiness Directives and Service
Bulletins.
4. The modification status of the aircraft is comparable to that most
common for an aircraft of its type and vintage.
5. There is no accident or incident damage.
6. The aircraft is in a standard airline configuration.
7. The utilization is comparable to industry averages.
8. The specifications are those that are most common for an aircraft of its
type and age.
9. The historical maintenance documentation has been maintained to
acceptable international standards.
We have also assumed that the aircraft are not encumbered by any attached
lease, tax benefit recapture or other extraneous factor that could have an
impact on their value.
Morten Beyer Letterhead footer
II-5
<PAGE> 144
We used more detailed information when such information was available.
Based on the information set forth in this report, it is our opinion that
the CBV of the subject aircraft are as follows:
<TABLE>
<CAPTION>
REGISTRATION BUILD DATE BASE VALUE
- ------------ ---------- -----------
<S> <C> <C>
N627AW July '89 $30,280,000
N628AW July '89 30,280,000
N629AW Sept '89 30,430,000
N632AW Sept '89 30,430,000
</TABLE>
MBA uses the definitions of certain industry terms, such as CBV and Current
Market Value (CMV), as promulgated by the International Society of Transport
Aircraft Trading (ISTAT), a not-for-profit association of some five hundred
members who are generally management personnel employed by banks, airlines,
manufacturers, appraisers, leasing companies, brokers, arrangers, etc. ISTAT has
developed definitions for many terms used in the industry and has also
established Standards for Appraisal Practice for appraisers who wish to be
certified by ISTAT as aircraft appraisers. A member who wishes to be certified
must meet specified levels of education and experience in the industry and must
successfully complete rigorous written examinations.
ISTAT defines MV as the most likely trading price that may be generated for
an aircraft under market conditions that are perceived to exist at the time in
question. MV assumes that the aircraft is valued for its highest best use, that
the parties to the hypothetical sales transaction are willing, able, prudent and
knowledgeable, and under no unusual pressure for a prompt sale, and that the
transaction would be negotiated in an open and unrestricted market on an arm's
length basis for cash or equivalent consideration, and given an adequate amount
of time for effective exposure to prospective buyers.
BV has essentially the same elements as MV, but the market conditions are
always assumed to be in a reasonable state of equilibrium. Thus, BV pertains to
an idealized aircraft and market combination, but will not necessarily reflect
the actual value of the aircraft in question. BV is founded in the historical
trend of values and is generally used to analyze historic values or to project
future values.
GPA has requested that MBA set forth the values in terms of BV for each
aircraft. It is noted that MBA currently appraises the CMV to be 15 percent
higher than the CBV due to the shortage of aircraft on the market, the long
delivery queue for new orders and the A320's superior economics.
The A320 was Airbus' first all new design since the launch of the original
A300 in 1971. The program was initiated in 1983 and logged almost 400 orders
prior to the first delivery in 1988. The A320 is offered with both the CFM56 and
the IAE V-2500 engine, with the CFM version having a long head start. More than
530 A320s have been delivered and 250 more are on order. 240 of the orders and
numerous options are held by leasing companies, and may be vulnerable to the
changing fortunes of this volatile market sector. The A320 has achieved a wide
market base on all continents, with a total of 69 operators to date.
The A320 has won worldwide acceptance due to its advanced engineering,
passenger comfort and fuel efficiency. The A320's principal rivals, the Boeing
737 and MD80, are built on platforms that are more than 30 years old, while the
A320's technology is 20 years younger. The cabin is six inches wider than the
737-300, permitting roomier seats and a wider aisle. Fuel consumption per seat
is approximately 9.5 percent less than the 737-300 and 17.5 percent less than an
MD80.
The aircraft, with its V-2500 engines, is measurably quieter than either
the 737-300 or MD80 and, thus, has a lower noise footprint and is less likely to
be impacted by future tightening of noise restrictions.
The A321, a stretched version designed to directly challenge the 757-200
and bridge the gap between the A320 and the A330/340, was launched in 1989.
Seating in the A321 was increased to 186 (and more in all-coach configuration)
from a nominal 150 in the A320, and the gross weight increased by 19,200 pounds.
II-6
<PAGE> 145
A truncated version of the A321, the A319, was officially launched in late
1992. Air Canada provided a major boost to the A319 in April, 1994 with an order
for 34 aircraft.
Airbus is striving for high levels of commonality among its A310 through
A340 series aircraft, and hopes to establish an advantage over Boeing by being
able to offer the large airlines an avenue for entire fleet refurbishment.
It is obvious that the airlines will use some of their large orders to
surplus older aircraft. The advent of the A320 family is hastening the
retirement of older, far less efficient jets. The A320s currently is service are
operating at seat-mile costs as low as half of that for older aircraft. We
believe that the A320 will have a long production run and in-service useful
life, with strong residual values.
The A320 also offers the advantage of being able to carry seven LD-3 cargo
containers, a feat not even the 767 can perform. The fuselage is approximately
10 inches wider than that of the 727/737/757 series, offering wider aisles and
roomier seats.
The A320 vies with the 757 for top honors as the most efficient aircraft in
service. Good fuel efficiency, new technology design and low operating
parameters all combine to give these aircraft among the lowest seat-mile costs
of any aircraft being built or in service.
CURRENT MARKET CONDITIONS
Generally, the market for used aircraft has shown continuing strong
performance in recent times as the shortage of good narrowbody aircraft
continues and the need for additional widebody capacity develops. The
availability of good used aircraft has been reduced to the lowest levels seen in
this decade.
During the last five years there have been more than eight hundred aircraft
reported as being on the market at one time. The number now available has shrunk
dramatically to only 324 according to BACK. By any standard, the availability of
good used aircraft has been reduced to a very low level. With some 14,000 jet
aircraft in service, the float of less than two percent is extremely low.
The availability of narrowbodies has been declining for two years, and
within the last year the availability of good used widebodies has also declined
significantly. The major focus has been on late model 747-200s and DC-10-30s,
leaving only DC-10-10s, L1011s and A300s still begging.
The world economy, which is a principal driver of the need for capacity for
the carriage of passengers and property, continues to be strong, with expansion
in virtually all sectors, although at varying rates for different regions.
Airlines are generally reporting stronger earnings which have historically
triggered the booms (and excesses) of the past.
The major US carriers are reporting higher earnings, but this is in part
because they are not ordering new aircraft and expanding. By holding capacity
growth to some two percent they are forcing up load factors and yields. This
will be changing as loans reach saturation and new orders follow. There has been
strong traffic growth in the US, and Europe, the Orient and South America are
also reporting strong growth.
The recent TWA, ValuJet and Delta incidents again have focused media
attention on airline safety, especially as it relates to older aircraft and/or
smaller low-fare carriers. Some countries are refusing to register imported
aircraft more than 15 years old, and the European Union requires aircraft more
than 25 years old to meet Stage III noise standards.
Older aircraft continue to have lower overall operating costs, especially
for new operators as capital/rental costs more than offset the effects of higher
maintenance and fuel expenses inherent in older aircraft.
With proper maintenance, the lives of older aircraft are virtually
unlimited, but politicians and the media immediately seize on aircraft age or
size as a cause whenever an older or smaller aircraft goes down, while
dismissing accidents involving newer aircraft. Therefore, there is an ongoing
risk that artificial restrictions may be placed on the operation of older
aircraft by political fiat, prematurely grounding the entire fleets of small new
operators and impairing those of many established large airlines as well.
However, in the interim, the
II-7
<PAGE> 146
major carriers in the US are increasingly planning to retain their remaining
Stage II aircraft and refurbish and hushkit them to Stage III standards.
The cost of fuel is another factor that can have a dramatic impact on the
value and availability of aircraft. Fuel prices have been relatively stable
during recent years, but increasing unrest in some of the oil producing regions
of the world has the potential to disrupt supplies from these regions, thus
impacting the cost and availability of fuel. A large increase in fuel costs
would translate into higher airline operating expenses, which could result in an
increase in fares which in turn could result in a significant reduction in the
demand for lift. Such a scenario would result in a decrease in the demand for
and prices of aircraft. Fuel efficient aircraft, such as the A320, would tend to
hold their values better than the older, less fuel efficient machines. BACK
lists four A320 series aircraft as being available on the market for sale and/or
lease, all of them for lease as opposed to being for sale.
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 presents MBA's opinion of the MV of the subject aircraft as
of the date of this report. MBA further certifies that it does not have, and
does not expect to have, any financial or other interest in the subject or
similar aircraft.
This report represents the opinion of MBA regarding the subject aircraft
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,
LOGO
Morten S. Beyer
President
ISTAT Certified Senior Appraiser
II-8
<PAGE> 147
APPENDIX III -- EQUIPMENT NOTES PRINCIPAL PAYMENT SCHEDULE
SERIES A
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR ------------------------------------------------------------
DISTRIBUTION DATES 66 67 76 81
------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
..................... $ $ $ $
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
</TABLE>
III-1
<PAGE> 148
SERIES B
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR ----------------------------------------------------------------
DISTRIBUTION DATES 66 67 76 81
------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
................. $ $ $ $
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
</TABLE>
III-2
<PAGE> 149
SERIES C
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR ----------------------------------------------------------------
DISTRIBUTION DATES 66 67 76 81
------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
................. $ $ $ $
.................
.................
.................
.................
.................
.................
.................
.................
.................
.................
</TABLE>
III-3
<PAGE> 150
SERIES D
<TABLE>
<CAPTION>
MANUFACTURER'S SERIAL NUMBER
REGULAR --------------------------------------------------------
DISTRIBUTION DATES 66 67 76 81
------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
....................... $ $ $ $
.......................
.......................
.......................
.......................
.......................
.......................
.......................
.......................
.......................
.......................
</TABLE>
III-4
<PAGE> 151
[AMERICA WEST LOGO]
<PAGE> 152
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........................................ $ 28,788
NASD Filing Fee............................................. 10,000
Printing and Engraving Expenses............................. 200,000
Accounting Fees and Expense................................. 125,000
Legal Fees and Expenses..................................... 750,000
Trustee Fees and Expenses................................... 15,000
Blue Sky Fees and Expenses.................................. 10,000
Rating Agency Fees.......................................... 62,000
Miscellaneous Expenses...................................... 15,000
----------
Total..................................................... $1,215,788
==========
</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 AWA'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 AWA's Restated Certificate
of Incorporation limits the liability of directors of AWA to AWA 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 AWA 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 AWA or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
II-1
<PAGE> 153
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 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 AWA will be
eliminated or limited to the full extent permitted by the DGCL, as so amended.
AWA 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. AWA has entered into an
agreement with GPA Group plc pursuant to which, among other things, GPA has
agreed to indemnify each of AWA's directors, each of its officers who shall sign
this Registration Statement, and each person, if any, who controls AWA 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.
AWA 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 1997-1A (included in Exhibit 4.6)
4.2* Form of America West Airlines Pass Through Certificates,
Series 1997-1B (included in Exhibit 4.7)
4.3* Form of America West Airlines Pass Through Certificates,
Series 1997-1C (included in Exhibit 4.8)
4.4* Form of America West Airlines Pass Through Certificates,
Series 1997-1D (included in Exhibit 4.9)
4.5* Pass Through Trust Agreement, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.6* Trust Supplement No. 1997-1A, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.7* Trust Supplement No. 1997-1B, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.8* Trust Supplement No. 1997-1C, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.9* Trust Supplement No. 1997-1D, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.10* Irrevocable Revolving Credit Agreement Class A Certificates,
dated as of , 1997 between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America
West Airlines Pass Through Trust 1997-1A, as Borrower, and
Kredietbank N.V., acting through its New York Branch, as
Liquidity Provider
</TABLE>
II-2
<PAGE> 154
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------
<C> <S>
4.11* Irrevocable Revolving Credit Agreement Class B Certificates,
dated as of , 1997 between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America
West Airlines Pass Through Trust 1997-1B, as Borrower, and
Kredietbank N.V., acting through its New York Branch, as
Liquidity Provider
4.12* Irrevocable Revolving Credit Agreement Class C Certificates,
dated as of , 1997 between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America
West Airlines Pass Through Trust 1997-1C, as Borrower, and
Kredietbank N.V., acting through its New York Branch, as
Liquidity Provider
4.13* Intercreditor Agreement, dated as of , 1997 among
Fleet National Bank, as Trustee under the America West
Airlines Pass Through Trust 1997-1A, America West Airlines
Pass Through Trust 1997-1B, America West Airlines Pass
Through Trust 1997-1C, America West Airlines Pass Through
Trust 1997-1D 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
4.14** Form of Refunding Agreement [GPA 1989 BN-8], dated as of
, 1997, 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
4.15* Form of Refunding Agreement [GPA 1989 BN-11], dated as of
, 1997, 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
4.16** Form of Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-8], dated as of December 18, 1989, Amended and
Restated as of , 1997, between Wilmington Trust Company
and America West Airlines, Inc.
4.17* Form of Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-11], dated as of December 19, 1989, Amended and
Restated as of , 1997, between Wilmington Trust Company
and America West Airlines, Inc.
4.18** Form of First Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-8], dated as of ,
1997 between Wilmington Trust Company, as Owner Trustee, and
The Chase Manhattan Bank, as Indenture Trustee
4.19* Form of First Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-11], dated as of ,
1997 between Wilmington Trust Company, as Owner Trustee, and
The Chase Manhattan Bank, as Indenture Trustee
4.20* Form of Series A Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
4.21* Form of Series B Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
4.22* Form of Series C Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
4.23* Form of Series D Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
5.1* Opinion of Andrews & Kurth L.L.P., counsel for America West
Airlines, Inc., relating to legality of the Certificates
</TABLE>
II-3
<PAGE> 155
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------
<C> <S>
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(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 8.2)
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. 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 AWA's Registration Statement on Form S-3 (File No. 333-27351)
filed with the Commission on May 16, 1997.
(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) AWA hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of AWA'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 AWA pursuant to the foregoing provisions, or otherwise, AWA
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, AWA will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to
a court of
II-4
<PAGE> 156
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) AWA 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
AWA 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> 157
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. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Phoenix, State of Arizona, on , 1997.
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 Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM A. FRANKE Chairman of the Board June 4, 1997
- -----------------------------------------------------
William A. Franke
* President, Chief Executive June 4, 1997
- ----------------------------------------------------- Officer and Director (Principal
Richard R. Goodmanson Executive Officer)
* Senior Vice President and Chief June 4, 1997
- ----------------------------------------------------- Financial Officer, (Principal
W. Douglas Parker Financial Officer)
* Vice President and Controller June 4, 1997
- ----------------------------------------------------- (Principal Accounting Officer)
Michael R. Carreon
* Director June 4, 1997
- -----------------------------------------------------
Julia Chang Bloch
* Director June 4, 1997
- -----------------------------------------------------
Stephen F. Bollenbach
* Director June 4, 1997
- -----------------------------------------------------
Frederick W. Bradley, Jr.
* Director June 4, 1997
- -----------------------------------------------------
James G. Coulter
* Director June 4, 1997
- -----------------------------------------------------
John F. Fraser
* Director June 4, 1997
- -----------------------------------------------------
John L. Goolsby
* Director June 4, 1997
- -----------------------------------------------------
Richard C. Kraemer
</TABLE>
II-6
<PAGE> 158
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director June 4, 1997
- -----------------------------------------------------
John R. Power, Jr.
* Director June 4, 1997
- -----------------------------------------------------
Larry L. Risley
* Director June 4, 1997
- -----------------------------------------------------
Frank B. Ryan
* Director June 4, 1997
- -----------------------------------------------------
Richard P. Schifter
* Director June 4, 1997
- -----------------------------------------------------
John F. Tierney
* Director June 4, 1997
- -----------------------------------------------------
Raymond S. Troubh
*By: /s/ WILLIAM A. FRANKE
- -----------------------------------------------------
William A. Franke,
Attorney-in-fact
</TABLE>
II-7
<PAGE> 159
INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors and Stockholder
America West Airlines, Inc.:
The audits referred to in our report dated February 28, 1997, included the
related financial statement schedule for the years ended December 31, 1996 and
1995, the period August 26, 1994 through December 31, 1994, and the period
January 1, 1994 through August 25, 1994 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 included in the
December 31, 1996 annual report on Form 10-K incorporated herein by reference
and to the reference to our Firm under the headings "Selected Financial and
Operating Data" and "Experts" in the Prospectus.
The audit report on the financial statements of America West Airlines, Inc.
referred to above contains an explanatory paragraph that states that as
discussed in Note 13 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
May 15, 1997
S-1
<PAGE> 160
AMERICA WEST AIRLINES, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995,
THE PERIOD AUGUST 26, 1994 THROUGH DECEMBER 31, 1994,
AND THE PERIOD JANUARY 1, 1994 THROUGH AUGUST 25, 1994
(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, 1996.................... $2,515 $2,950 $2,374 $3,091
====== ====== ====== ======
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
====== ====== ====== ======
Reserve for obsolescence:
Year ended December 31, 1996.................... $2,115 $1,523 $1,925 $1,713
====== ====== ====== ======
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) $ --
====== ====== ====== ======
</TABLE>
- ---------------
(a) Includes fresh start adjustment of approximately $7.9 million.
S-2
<PAGE> 161
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------
<C> <S>
1.1* Underwriting Agreement
4.1* Form of America West Airlines Pass Through Certificates,
Series 1997-1A (included in Exhibit 4.6)
4.2* Form of America West Airlines Pass Through Certificates,
Series 1997-1B (included in Exhibit 4.7)
4.3* Form of America West Airlines Pass Through Certificates,
Series 1997-1C (included in Exhibit 4.8)
4.4* Form of America West Airlines Pass Through Certificates,
Series 1997-1D (included in Exhibit 4.9)
4.5* Pass Through Trust Agreement, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.6* Trust Supplement No. 1997-1A, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.7* Trust Supplement No. 1997-1B, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.8* Trust Supplement No. 1997-1C, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.9* Trust Supplement No. 1997-1D, dated as of , 1997
between America West Airlines, Inc. and Fleet National Bank,
as Trustee
4.10* Irrevocable Revolving Credit Agreement Class A Certificates,
dated as of , 1997 between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America
West Airlines Pass Through Trust 1997-1A, as Borrower, and
Kredietbank N.V., acting through its New York Branch, as
Liquidity Provider
4.11* Irrevocable Revolving Credit Agreement Class B Certificates,
dated as of , 1997 between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America
West Airlines Pass Through Trust 1997-1B, as Borrower, and
Kredietbank N.V., acting through its New York Branch, as
Liquidity Provider
4.12* Irrevocable Revolving Credit Agreement Class C Certificates,
dated as of , 1997 between Fleet National Bank, as
Subordination Agent, as agent and trustee for the America
West Airlines Pass Through Trust 1997-1C, as Borrower, and
Kredietbank N.V., acting through its New York Branch, as
Liquidity Provider
4.13* Intercreditor Agreement, dated as of , 1997 among
Fleet National Bank, as Trustee under the America West
Airlines Pass Through Trust 1997-1A, America West Airlines
Pass Through Trust 1997-1B, America West Airlines Pass
Through Trust 1997-1C, America West Airlines Pass Through
Trust 1997-1D 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
4.14** Form of Refunding Agreement [GPA 1989 BN-8], dated as of
, 1997, 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
4.15* Form of Refunding Agreement [GPA 1989 BN-11], dated as of
, 1997, 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
</TABLE>
<PAGE> 162
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------------
<C> <S>
4.16** Form of Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-8], dated as of December 18, 1989, Amended and
Restated as of , 1997, between Wilmington Trust Company
and America West Airlines, Inc.
4.17* Form of Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-11], dated as of December 19, 1989, Amended and
Restated as of , 1997, between Wilmington Trust Company
and America West Airlines, Inc.
4.18** Form of First Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-8], dated as of ,
1997 between Wilmington Trust Company, as Owner Trustee, and
The Chase Manhattan Bank, as Indenture Trustee
4.19* Form of First Amended and Restated Trust Indenture and
Security Agreement [GPA 1989 BN-11], dated as of ,
1997 between Wilmington Trust Company, as Owner Trustee, and
The Chase Manhattan Bank, as Indenture Trustee
4.20* Form of Series A Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
4.21* Form of Series B Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
4.22* Form of Series C Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
4.23* Form of Series D Equipment Note, dated , 1997
issued by Wilmington Trust Company, as Owner Trustee,
payable to the Pass Through Trustee (included in each of
Exhibits 4.18 and 4.19)
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(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 8.2)
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. 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 AWA's Registration Statement on Form S-3 (File No. 333-27351)
filed with the Commission on May 16, 1997.
<PAGE> 1
Exhibit 1.1
AMERICA WEST AIRLINES, INC.
1997-1 PASS THROUGH TRUSTS
$_______,000
Pass Through Certificates, Series 1997-1A, 1997-1B, 1997-1C and 1997-1D
UNDERWRITING AGREEMENT
May __, 1997
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, as underwriter
(the "Underwriter"), 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.
The Offered Certificates will be issued pursuant to a pass
through trust agreement, dated as of June __, 1997 (the "Basic Agreement"), and
four separate supplements thereto, dated as of June __, 1997 (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 1997-1A (the
"Class A Trust"), America West Airlines Pass Through Trust Series 1997-1B (the
"Class B Trust"), America West Airlines Pass Through Trust Series 1997-1C (the
"Class C Trust") and America West Airlines Pass Through Trust Series 1997-1D
(the "Class D Trust" and, together with the Class A Trust, the Class B Trust
and the Class C 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 June __,
1997, 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,
<PAGE> 2
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 June __, 1997 (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 the
Equipment Notes (as defined in the Pass Through Trust Agreements) are not
obligations of the Company or 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 four Indentures referred
to in such Pass Through Trust Agreements or in each of the four Leases referred
to in such Indentures.
The Company understands that the Underwriter proposes 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). 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
2
<PAGE> 3
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, the 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 Underwriter for its 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
the Underwriter Information (as defined in Section 8(a) hereof) 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 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.
3
<PAGE> 4
(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 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.
4
<PAGE> 5
(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 (it being understood that no representation is made as to
what actions, if any, must be taken by any Person other than the
Company to consummate such transactions).
(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 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,
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<PAGE> 6
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; 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.
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<PAGE> 7
(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
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
7
<PAGE> 8
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, to the best of the
Company's knowledge, has a substantial interest, direct or indirect,
in the Company. To the best of 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.
(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.
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<PAGE> 9
(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") and GPA Leasing USA Sub I, Inc. ("GPA Sub I" and,
collectively with GPA Group, "GPA") represents and warrants to, and agrees
with, the Underwriter 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 Underwriter for its 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 the Underwriter Information 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.
(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) 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
9
<PAGE> 10
(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
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 or GPA Sub I to perform their
respective obligations under this Agreement and the other Operative
Documents to which GPA Group 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 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 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 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 or GPA Sub I
pursuant to any indenture, loan agreement, contract or other
instrument to which GPA Group or GPA Sub I is a party or by which GPA
Group or GPA Sub I may be bound or to which any of the property or
assets of GPA Group 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 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 or GPA Sub I.
(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 or GPA Sub I of this Agreement and the
Operative Documents to which GPA Group 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
10
<PAGE> 11
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 or GPA Sub I, threatened against GPA Group 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 nor GPA Sub I has taken any corporate
action or, to the best knowledge of GPA Group 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 and GPA Sub I is a party have been duly executed and
delivered by each of GPA Group and GPA Sub I, and the other Operative
Documents to which GPA Group and GPA Sub I will be a party will be
duly executed and delivered by each of GPA Group and GPA Sub I on or
prior to the Closing Date.
(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 and the Indentures provide accurate summaries of
such provisions in all material respects.
(k) The Operative Documents (other than this Agreement) to
which each of GPA Group or GPA Sub I is or will be a party will
constitute, when duly executed and delivered by each of GPA Group or
GPA Sub I, as the case may be, assuming that such Operative Documents
have been duly authorized, executed and delivered by, and
11
<PAGE> 12
constitute the legal, valid and binding obligations of, each other
party thereto, the legal, valid and binding obligations of each of GPA
Group or GPA Sub I, as the case may be, enforceable against each of
GPA Group 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 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 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 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.
(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 the Underwriter,
and the Underwriter agrees to purchase from each Trustee, at a
purchase price of 100% of the principal amount thereof, the aggregate
principal amount of Offered Certificates of each Trust set forth in
Schedule I hereto.
(b) The Company is advised by the Underwriter that the
Underwriter proposes to make a public offering of the Offered
Certificates as soon after this Agreement has been entered into as in
the Underwriter's judgment is advisable. The Company is further
advised by the Underwriter 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 Underwriter at
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<PAGE> 13
concessions not in excess of the concessions set forth in the
Prospectus, and that the Underwriter 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 Underwriter for its commitments
and obligations hereunder in respect of the Offered Certificates,
including its undertakings to distribute the Offered Certificates, GPA
Sub I will pay to the Underwriter with respect to the Offered
Certificates of each Trust purchased by it as set forth in Schedule I
hereto 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 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 Underwriter 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 June
__, 1997, the Underwriter, 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 the
Underwriter 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 through
the facilities of The Depository Trust Company against payment by the
Underwriter 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 the Underwriter 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 the Underwriter in
New York, New York not later than 1:00 P.M. on the business day prior
to the Closing Date.
5. Certain Agreements of the Company. The Company
agrees with the Underwriter that:
(a) The Company will advise the Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will not effect such amendment or supplementation
without the consent of the Underwriter, 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 the Underwriter or a dealer under the Act any event
occurs as a result of which in the reasonable opinion of counsel to
the Underwriter 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
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<PAGE> 14
promptly will prepare, at the expense of GPA Sub I (or, alternatively,
at the expense of GPA Group), an amendment or supplement which, in the
reasonable opinion of counsel to the Underwriter 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 expense of GPA Sub I (or,
alternatively, at the expense of GPA Group), to the Underwriter and to
the dealers (whose names and addresses the Underwriter will furnish to
the Company), upon request, copies of the Prospectus as so amended or
supplemented. Neither the consent of the Underwriter to, nor the
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 expense of GPA Sub I (or, alternatively, at the
expense of GPA Group), the Company will furnish to the Underwriter 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 the Underwriter may reasonably
request.
(c) At the expense of GPA Sub I (or, alternatively, at the
expense of GPA Group), the Company will furnish to the 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 the 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 expense of GPA Sub I (or,
alternatively, at the expense of GPA Group), will take such actions as
may be reasonably requested by the Underwriter 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 Underwriter reasonably designates and will
continue such qualifications in effect so long as required for the
resale of the Offered Certificates by the Underwriter; 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 the
Underwriter 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.
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<PAGE> 15
(f) During the period of five years hereafter, the Company
will promptly furnish to the Underwriter 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 the Underwriter, 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 or the Trusts
as the Underwriter may reasonably request.
(h) The Company will, during the period when a prospectus
relating to the Offered Certificates is required to be delivered by
the 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. The Underwriter will notify the Company when such period
shall have expired.
(i) The Company will notify the Underwriter 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 expense of 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 the prior written consent of the
Underwriter, 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.
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<PAGE> 16
(k) In connection with the offering, until the Underwriter
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 expense of 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
Underwriter that:
(a) GPA Sub I shall pay (or cause to be paid), or if GPA Sub
I fails to pay, GPA Group shall pay, the following (without
duplication and subject to any other agreement in writing with the
Underwriter): (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 Underwriter's counsel and
the reasonable fees and disbursements of Underwriter's counsel in
connection with such memorandum or survey, (iii) the delivery of the
Offered Certificates to the Underwriter, (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 Underwriter 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 Underwriter
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 Underwriter's
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 Underwriter 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
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<PAGE> 17
each of the Aircraft, and (xiv) all expenses specified in Section 21
of each Refunding Agreement.
If this Agreement is terminated by the Underwriter in
accordance with the provisions of Section 10, GPA shall reimburse the
Underwriter 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 Underwriter.
The obligations of the Underwriter 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 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 Foreign
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
17
<PAGE> 18
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 the judgment of the Underwriter,
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 the judgment of the
Underwriter, impracticable or inadvisable to market the
Offered Certificates on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriter shall have received a letter, dated the
date of this Agreement, from KPMG Peat Marwick LLP in form and
substance reasonably satisfactory to the Underwriter.
(c) On the Closing Date, the Underwriter shall have received:
(1) The favorable opinions, dated as of the Closing
Date, of Andrews & Kurth L.L.P., Latham & Watkins, Lewis and
Roca, and Baker & Hostetler, counsel for the Company, in form
and substance reasonably satisfactory to the Underwriter.
(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 the Underwriter.
(3) The favorable opinion, dated as of the Closing
Date, of Paul, Hastings, Janofsky & Walker LLP, counsel for
GPA Group and GPA Sub I, in form and substance reasonably
satisfactory to the Underwriter.
(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 the Underwriter.
(5) The favorable opinion, dated as of the Closing
Date, of White & Case, counsel for DFO Partnership, as Owner
Participant, in form and substance reasonably satisfactory to
the Underwriter.
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<PAGE> 19
(6) The favorable opinion, dated as of the Closing
Date of the general counsel or assistant general counsel for
DFO Partnership, as Owner Participant, in form and substance
reasonably satisfactory to the Underwriter.
(7) The favorable opinion, dated as of the Closing
Date, of Freshfields, counsel to GPA, regarding the Foreign
Financing Documents in form and substance reasonably
satisfactory to the Underwriter.
(8) The favorable opinion, dated as of the Closing
Date, of Kelley, Drye & Warren, counsel for The Chase
Manhattan Bank, as Indenture Trustee, in form and substance
reasonably satisfactory to the Underwriter.
(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 the Underwriter.
(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 the Underwriter.
(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 the Underwriter.
(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 the Underwriter.
(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 the
Underwriter.
(14) The favorable opinion, dated as of the Closing
Date, of Daugherty, Fowler & Peregrin, special FAA counsel, in
form and substance reasonably satisfactory to the Underwriter.
(15) The favorable opinion, dated as of the Closing
Date, of Milbank, Tweed, Hadley & McCloy, special counsel to
the Underwriter, with respect to Section 1110 of the
Bankruptcy Code, in form and substance reasonably satisfactory
to the Underwriter.
(16) The favorable opinion, dated as of the Closing
Date, of Milbank, Tweed, Hadley & McCloy, special counsel to
the Underwriter, with respect to
19
<PAGE> 20
the validity of the Offered Certificates, the Prospectus, and
other related matters as the Underwriter 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 the
Underwriter 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) The Underwriter 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 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) The Underwriter shall have received a certificate, dated
the Closing Date, of any authorized officer of each of GPA Group 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 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 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) The Underwriter 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 the Underwriter 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 the
Underwriter, promptly after the Closing Date, a copy of each opinion
required to be delivered under the applicable Operative Document
addressed to the
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<PAGE> 21
Underwriter and of such other documents furnished in connection with
the fulfillment of the conditions precedent therein as the Underwriter
or special counsel to the Underwriter may reasonably request.
(i) Each of the Company and GPA shall have furnished or
caused to be furnished to the Underwriter prior to or at the Closing
Date, in form and substance satisfactory to the Underwriter and
special counsel to the Underwriter, such other information, documents,
certificates and opinions as the Underwriter, special counsel to the
Underwriter, 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 and the Class D Certificates shall be
rated [Ba3] by Moody's and [BB] 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 Underwriter.
The Company will furnish the Underwriter with such conformed
copies of such agreements, opinions, certificates, letters and documents as the
Underwriter may reasonably request. The Underwriter may waive compliance with
any conditions to its obligations hereunder.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Underwriter, and each Person, if any, who controls the Underwriter within the
meaning of either Section 15 of the Act, or Section 20 of the Exchange Act, or
is under common control with the Underwriter, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by the 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 made in
reliance upon and in conformity with information furnished by the Underwriter
in writing in a letter delivered on the Closing Date to the Company and GPA
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<PAGE> 22
expressly for use therein (the "Underwriter Information"); 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 the Underwriter (or any person
controlling or under common control with the 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 the 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 and GPA Sub I, jointly and severally, agree
to indemnify and hold harmless, the Underwriter, and each Person, if any, who
controls the Underwriter within the meaning of either Section 15 of the Act, or
Section 20 of the Exchange Act, or is under common control with the
Underwriter, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by the 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 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
made in reliance upon and in conformity with the Underwriter Information;
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 the Underwriter (or any person controlling or under common
control with the 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 the 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
22
<PAGE> 23
result of noncompliance by the Company with the delivery requirements set forth
in Section 5 hereof.
(c) The Underwriter agrees to indemnify and hold harmless the
Company, the GPA Group 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 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 or GPA Sub I, to the same extent as the
foregoing indemnities from the Company, the GPA Group and GPA Sub I to the
Underwriter, but only with reference to the Underwriter Information.
(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 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 the Underwriter, in the case of parties indemnified pursuant to
paragraphs (a) or (b) above, and by the Company, the GPA Group 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 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) or (c) of this Section 8 is unavailable to an indemnified party
referred to in either such paragraph or
23
<PAGE> 24
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under the applicable 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 on the one hand, and
(B) the Underwriter 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 and (B) the Underwriter, 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 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 Underwriter 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 Underwriter
in 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 Underwriter 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 or the Underwriter 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 or (b) the Underwriter, 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 and the Underwriter shall be deemed to have supplied the
Underwriter Information.
(f) To the extent the indemnification provided for in
paragraph (b) or (c) of this Section 8 is unavailable to an indemnified party
referred to in either such paragraph or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying
party under the applicable 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) GPA on the one hand, and (B) the Underwriter 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) GPA and (B)
the Underwriter, 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 GPA 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
Underwriter 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
24
<PAGE> 25
relative benefits received by the Underwriter in 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 Underwriter in respect
thereof, as set forth in the Prospectus, bears to the aggregate public offering
price of the Offered Certificates. The relative fault of GPA or the
Underwriter 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) GPA or (b) the Underwriter, 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, GPA shall be deemed to have
supplied the GPA Information and the Underwriter shall be deemed to have
supplied the Underwriter Information.
(g) The Company, GPA and the Underwriter 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 paragraphs
(e) and (f) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in paragraphs
(e) and (f) 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, the Underwriter
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Offered Certificates underwritten by the
Underwriter and distributed to the public were offered to investors exceeds the
amount of any damages that the 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.
(h) 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 the Underwriter or any person controlling the Underwriter or by or on
behalf of or the Company, the GPA Group or GPA Sub I, their respective officers
or directors or any person controlling the Company, the GPA Group 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. 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 Underwriter 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
the 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 Underwriter 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 Underwriter
25
<PAGE> 26
pursuant to Section 8 shall remain in effect. If the purchase of the Offered
Certificates by the Underwriter is not consummated for any reason other than
solely because of the occurrence of the termination of the Agreement pursuant
to Section 10, GPA shall reimburse the Underwriter 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.
10. Termination. This Agreement shall be subject to
termination by notice given by the Underwriter 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 the judgment of the
Underwriter, 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 the judgment of the Underwriter, impracticable or
inadvisable to market the Offered Certificates on the terms and in the manner
contemplated in the Prospectus.
11. Notices. All communications hereunder will be in writing
and will be mailed, delivered or sent by facsimile transmission and confirmed
(a) if to the Underwriter, 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; and (d) if to GPA Sub I, GPA Leasing USA Sub I,
Inc., at 83 Wooster Heights Road, Danbury, Connecticut 06810, Attention:
President, facsimile number 203-830-4764.
12. 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.
13. 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.
14. 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.
26
<PAGE> 27
15. 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 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 Latham & Watkins, 885 Third Avenue, Suite
100, New York, NY 10022, Attention: Robert A. Greenspon and GPA Group 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 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 or GPA Sub I. Each of the Company, GPA Group and GPA
Sub I represents to the Underwriter 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 and GPA Sub I hereby
irrevocably authorizes and directs its Process Agent to accept such service.
Each of the Company, GPA Group 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 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 or GPA Sub I, as the case may
be, in any such suit, action or proceeding. Nothing herein shall affect the
right of the Underwriter or any person controlling the Underwriter to serve
process in any other manner permitted by law. Each of the Company, GPA Group
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 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 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 the Underwriter or by any persons controlling the Underwriter within
the meaning of Section 15 of the Securities Act or any director, officer,
employee or agent of the Underwriter. This
27
<PAGE> 28
waiver is intended to be effective upon the execution of this Agreement without
any further act by the Company, GPA Group 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.
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.
_____________________________
28
<PAGE> 29
If the foregoing is in accordance with the Underwriter's
understanding of our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument will become a binding agreement
among the Underwriter, the Company, GPA Group 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 SUB I, INC.
By:
--------------------------
Name:
Title:
Accepted as of the date first above written:
Morgan Stanley & Co. Incorporated
By:
-----------------------------
Name:
Title:
<PAGE> 30
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of Principal Amount of Principal Amount of
Pass Through Pass Through Pass Through Pass Through
Certificates of the Certificates of the Certificates of the Certificates of the
Class A Trust Class B Trust Class C Trust Class D Trust
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Morgan Stanley & Co. $ $ $ $
Incorporated
</TABLE>
1
<PAGE> 31
SCHEDULE II
<TABLE>
<CAPTION>
Pass Through Aggregate
Certificate Principal Interest Final Expected
Designation Amount Rate Distribution Date Commissions* Commissions**
------------ --------- -------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1997-1A $ % % $
1997-1B
1997-1C
1997-1D
Total $
=
</TABLE>
- -----------------------
* Expressed as a percentage of Aggregate Principal Amount.
** Expressed in dollars.
<PAGE> 32
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 information on the cover page of the Registration
Statement.
(b) The information contained in the last two paragraphs
on page 2 of the Prospectus.
(c) The information under the headings "Available
Information and Reports to Certificateholders," "Incorporation of Certain
Documents by Reference" and "Forward Looking Information".
(d) 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".
(e) The information under the headings "Risk
Factors--Company Related Risks" and "--Industry Related Risks."
(f) The information under the headings "Risk
Factors-Factors Relating to the Certificates and the Offering--Repossession,"
"--Maintenance," "--Insurance" and "--Absence of a Public Market for the
Certificates."
(g) 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."
(h) The information contained in fifth, sixth and seventh
paragraphs under the heading "Description of the Equipment Notes--Remedies."
(i) 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.
(j) The information under the heading "Description of the
Equipment Notes--The Leases."
(k) The information under the headings "Certain U.S.
Federal Income Tax Consequences," "ERISA Considerations," "Underwriting"
(excluding the sixth paragraph thereof relating to indemnification and
reimbursement of the Underwriter) and "Legal Matters."
(l) The information under the first two paragraphs under
the heading "Experts."
(m) 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.
(n) All annual, quarterly and other reports, exhibits and
other documents incorporated by reference in the Registration Statement and the
Prospectus.
(o) The information included in Part II of the
Registration Statement, excluding the information under "Item 14. Other
Expenses of Issuance and Distribution".
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.
<PAGE> 1
Exhibit 4.5
AMERICA WEST AIRLINES, INC.
and
FLEET NATIONAL BANK,
as Trustee
PASS THROUGH TRUST AGREEMENT
Dated as of June __, 1997
<PAGE> 2
Reconciliation and tie between Pass Through Trust Agreement dated as of June
__, 1997 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.01. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.02. Acquisition of Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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> <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 . . . . . . . . . . . . . 35
Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions . . . . . . . . . . . . 35
Section 6.08. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.07. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.08. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 41
Section 7.09. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.10. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 44
Section 7.11. Maintenance of Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.12. Money for Certificate Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . 46
Section 7.13. Registration of Equipment Notes in Trustee's Name . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.14. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.15. Withholding Taxes; Information Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.16. Trustee's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.17. Preferential Collection of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.01. The Company to Furnish Trustee with Names and Addresses
of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.02. Preservation of Information; Communications to Certificateholders . . . . . . . . . . . . . . 48
Section 8.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.04. Reports by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
SUPPLEMENTAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 9.01. Supplemental Agreements Without Consent of Certificateholders . . . . . . . . . . . . . . . . 50
Section 9.02. Supplemental Agreements with Consent of Certificateholders . . . . . . . . . . . . . . . . . 51
Section 9.03. Documents Affecting Immunity or Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.04. Execution of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.05. Effect of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.06. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.07. Reference in Certificates to Supplemental Agreements . . . . . . . . . . . . . . . . . . . . 53
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.01. Amendments and Supplements to Indenture and Other Note Documents . . . . . . . . . . . . . . 53
ARTICLE XI
TERMINATION OF TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 11.01. Termination of the Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.01. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.02. Liabilities of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.03. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 12.04. Registration of Equipment Notes in Name of Subordination Agent . . . . . . . . . . . . . . . 56
Section 12.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 12.06. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
iii
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 12.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.08. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.09. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.11. Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.14. Communication by Certificateholders with Other Certificateholders . . . . . . . . . . . . . 58
</TABLE>
Exhibit A - Form of Certificate
iv
<PAGE> 7
This PASS THROUGH TRUST AGREEMENT, dated as of June __ 1997,
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
<PAGE> 8
2
Act of 1939, as amended, and shall to the extent applicable, be governed by
such provisions;
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
<PAGE> 9
3
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.
Act: With respect to any Certificateholder, has the meaning
specified in Section 1.04.
Affiliate: With respect to any specified Person, means any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Aircraft: Means one or more aircraft, including engines
therefor, owned by or leased to the Company and securing one or more Equipment
Notes.
Authorized Agent: With respect to the Certificates of any
series, means any Paying Agent or Registrar for the Certificates of such
series.
Avoidable Tax: Has the meaning specified in Section 7.08(e).
Basic Agreement: Means this Pass Through Trust Agreement, as
the same may from time to time be supplemented, amended or modified, but does
not include any Trust Supplement.
Book-Entry Certificates: With respect to the Certificates of
any series, means Certificates of such series which are issued in book-entry
form, ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.09.
Business Day: With respect to the Certificates of any series
and unless specified otherwise in any Trust Supplement, means any day other
than a Saturday, a Sunday or a day on which commercial banks are required or
authorized to close in New York, New York or Hartford, Connecticut.
Certificate: Means any one of the Certificates, substantially
in the form of Exhibit A hereto, and any such Certificates issued in exchange
therefor or replacement thereof pursuant to this Agreement.
Certificate Account: With respect to the Certificates of any
series, means the account or accounts created and maintained for such series
pursuant to Section 4.01(a) and the related Trust Supplement.
<PAGE> 10
4
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.
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 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.
<PAGE> 11
5
ERISA: Means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor federal statute.
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 Aircraft; 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.
<PAGE> 12
6
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.
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 Aircraft 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
<PAGE> 13
7
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 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 Aircraft 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
<PAGE> 14
8
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.
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.
<PAGE> 15
9
PTC Event of Default: With respect to the Certificates of any
series, has the meaning specified in the Trust Supplement establishing each
series.
Record Date: With respect to any Trust or the related series
of Certificates, means (i) for Scheduled Payments to be distributed on any
Regular Distribution Date, other than the final distribution, with respect to
such series, the 15th day (whether or not a Business Day) preceding such
Regular Distribution Date, and (ii) for Special Payments to be distributed on
any Special Distribution Date, other than the 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
<PAGE> 16
10
Trustee or any Subordination Agent within five days of the date on which such
payment is scheduled to be made) due from the obligor thereon which payment
represents the installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the payment of regularly
scheduled interest accrued on the unpaid principal amount of such Equipment
Note, or both; provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of any Equipment Note shall
not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as from
time to time constituted or created under the Securities Exchange Act of 1934,
or, if at any time after the execution of 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.
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
<PAGE> 17
11
obligated to repurchase any such obligation not later than ninety (90) days
after the purchase of any such obligation and (v) money market funds which
invest solely in obligations described in clause (i) or (ii); provided further
that if all of the above investments are unavailable, the entire amounts to be
invested may be used to purchase Federal Funds from an entity described in
clause (iii) above; and provided further that no investment shall be eligible
as a "Specified Investment" unless the final maturity or date of return of such
investment is on or before the Special Distribution Date next following the
Cut-off Date, if any, for such Trust by more than 20 days.
Subordination Agent: Shall have the meaning specified
therefor in any Intercreditor Agreement.
Substitute Aircraft: With respect to any Trust, 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.
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
<PAGE> 18
12
fractional undivided interests in such Trust is authorized and (iii) the terms
of the Certificates of such series are established.
Trustee: Means the institution executing this Basic Agreement
as Trustee, or its successor in interest, and any successor trustee appointed
as provided herein.
Trustee's Lien: Has the meaning specified in Section 7.16.
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
<PAGE> 19
13
to whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and 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
<PAGE> 20
14
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact
and date of the execution of any such instrument or writing, or the authority
of the Person executing the same, may also be proved in any other reasonable
manner which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates of any series
Outstanding have given any direction, consent or waiver (a "Direction"), under
this Agreement, Certificates owned 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
<PAGE> 21
15
such record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Basic Agreement not later than one year after the record
date.
(e) Any direction, consent, waiver or other action by the
Certificateholder of any Certificate shall bind the Certificateholder of every
Certificate issued upon the transfer thereof or in exchange therefor or in lieu
thereof, whether or not notation of such action is made upon such Certificate.
(f) Except as otherwise provided in Section 1.04(c),
Certificates of any series owned by or pledged to any Person shall have an
equal and proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates of such
series.
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
<PAGE> 22
16
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;
(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
<PAGE> 23
17
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 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
<PAGE> 24
18
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 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,
<PAGE> 25
19
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 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
<PAGE> 26
20
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 (as defined in the respective related Indentures) by bidding such
Equipment Notes or otherwise, or taking any action with respect to any such
Aircraft 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 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.
<PAGE> 27
21
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 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
<PAGE> 28
22
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 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.
<PAGE> 29
23
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 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.
<PAGE> 30
24
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 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
<PAGE> 31
25
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 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
<PAGE> 32
26
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.
(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.
<PAGE> 33
27
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:
(i) the scheduled Special Distribution Date and the
Record Date therefor (except as otherwise provided in Section 11.01),
<PAGE> 34
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(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 Agency's books as holding interests in the Certificates on such
Record Date. On each Distribution Date, the applicable Trustee
<PAGE> 35
29
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
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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
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conditions precedent herein provided for relating to such transaction
have been complied with.
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
<PAGE> 38
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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 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 Aircraft subject to such related Lease, except in accordance
with the provisions of the related Lease.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any
sale of all or any part of the Equipment Notes made either under the power of
sale given under this Agreement or otherwise for the enforcement of this
Agreement, the following shall be applicable:
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(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.
(2) Receipt of Trustee Shall Discharge Purchaser. The
receipt of the Trustee or of the officer making such sale shall be a
sufficient discharge to any purchaser for his purchase money, and,
after paying such purchase money and receiving such receipt, such
purchaser or its personal representative or assigns shall not be
obliged to see to the application of such purchase money, or be in any
way answerable for any loss, misapplication or non-application
thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Agreement or otherwise for the enforcement of this
Agreement shall, after payment of fees and expenses of the Trustee as
provided in Section 7.06, be applied as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit. If there shall be a failure to make payment when due
and payable of the principal of, premium, if any, or interest on any Equipment
Note, or if there shall be any failure to pay any other amount under any
Indenture when due and payable, then the Trustee, in its own name, and as
trustee of an express trust, as holder of such Equipment Notes, to the extent
permitted by and in accordance with the terms of any Intercreditor Agreement
and any Note Documents (subject to the rights of the applicable Owner Trustee
or Owner Participant to cure any such failure in accordance with the applicable
Indenture), shall be entitled and empowered to institute any suits, actions or
proceedings at law, in equity or otherwise, for the collection of the sums so
due and unpaid on such Equipment Notes or under such Indenture and may
prosecute any such claim or proceeding to judgment or final decree with respect
to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to
Section 6.03 and any Intercreditor Agreement, the Certificateholders holding
Certificates of a series evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the related Trust shall have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee with respect to such Trust or pursuant to the
terms of any Intercreditor Agreement, or exercising any trust or power
conferred on the Trustee under this Agreement or any Intercreditor Agreement,
including any right of
<PAGE> 40
34
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 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
<PAGE> 41
35
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 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
<PAGE> 42
36
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.
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.
<PAGE> 43
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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 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;
<PAGE> 44
38
(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
(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
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39
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), 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
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40
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 (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
<PAGE> 47
41
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 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
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42
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 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
<PAGE> 49
43
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 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.
<PAGE> 50
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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 (including this account), 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. The parties hereto
acknowledge that the Fleet National Bank intends to sell its corporate trust
business to State Street Bank and Trust Company or an affiliate thereof during
1997 and that upon the sale of this account to such purchaser, such purchaser
shall be the successor of the Trustee hereunder provided it shall be otherwise
qualified and eligible under this Article. 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. 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
<PAGE> 51
45
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 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.
<PAGE> 52
46
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;
(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
<PAGE> 53
47
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 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.
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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 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.
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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 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
<PAGE> 56
50
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 add to this Agreement such other provisions
as may be expressly permitted by the Trust Indenture Act, excluding,
<PAGE> 57
51
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> 58
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payable, or impair the right to institute suit for the enforcement of
any such payment or distribution on or after the Regular Distribution
Date or Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note in the Trust
Property of such Trust except as permitted by this Agreement or
otherwise deprive such Certificateholder of the benefit of the
ownership of the Equipment Notes in such Trust; or
(3) alter the priority of distributions specified in any
Intercreditor Agreement; or
(4) reduce the specified percentage of the aggregate
Fractional Undivided Interests of such Trust which is required for any
such supplemental agreement, or reduce such specified percentage
required for any waiver (of compliance with certain provisions of this
Agreement or certain defaults hereunder and their consequences)
provided for in this Agreement;
(5) modify any of the provisions of this Section or Section
6.05, except to increase any such percentage or to provide that
certain other provisions of this Agreement cannot be modified or
waived without the consent of the Certificateholder of each
Certificate or such series affected thereby; or
(6) adversely affect the status of any Trust as a grantor
trust under Subpart E, Part I of Subchapter J of Chapter 1 of Subtitle
A of the Internal Revenue Code of 1986, as amended, for U.S. federal
income tax purposes.
It shall not be necessary for any Act of such
Certificateholders under this Section to approve the particular form of any
proposed supplemental agreement but it shall be sufficient if such Act shall
approve the substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity. If
in the opinion of the Trustee any document required to be executed by it
pursuant to the terms of Section 9.01 or 9.02 affects any interest, right,
duty, immunity or indemnity in favor of the Trustee under this Basic Agreement
or any Trust Supplement, the Trustee may in its discretion decline to execute
such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any supplemental
agreement permitted by this Article or the modifications thereby of the trusts
created by this Agreement, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Opinion of Counsel stating that the
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execution of such supplemental agreement is authorized or permitted by this
Agreement.
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
<PAGE> 60
54
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 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 the earlier of (i) one hundred ten (110) years following the
date of the earliest execution of this Agreement or (ii) the expiration of
twenty-one (21) years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James's, living on the date hereof.
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,
<PAGE> 61
55
(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 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
<PAGE> 62
56
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 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
<PAGE> 63
57
Facsimile: (602) 693-5904
if to the Trustee, to:
Mail: Fleet National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration -
Responsible Officer - America West
Airlines Pass Through Trusts under the
Pass Through Trust Agreement dated
June __, 1997
Facsimile: (860) 986-7920
Telephone: (860) 986-4545
Any such notice shall be effective when received.
(b) The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders of any
series shall be mailed by first-class mail to the addresses for
Certificateholders of such series shown on the Register kept by the Registrar
and to addresses filed with the Trustee for Certificate Owners of such series.
Failure so to mail a notice or communication or any defect in such notice or
communication shall not affect its sufficiency with respect to other
Certificateholders or Certificate Owners of such series.
(d) If the Company mails a notice or communication to the
Certificateholders of such series, it shall mail a copy to the Trustee and to
each Paying Agent for such series at the same time.
(e) Notwithstanding the foregoing, all communications or
notices to the Trustee shall be deemed to be given only when received by a
Responsible Officer of the Trustee.
(f) The Trustee shall promptly furnish the Company with a
copy of any demand, notice or written communication received by the Trustee
hereunder from any Certificateholder, Owner Trustee or Indenture Trustee.
Section 12.06. Governing Law. THIS BASIC AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST SUPPLEMENTS AND
CERTIFICATES, SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE> 64
58
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.
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
<PAGE> 65
59
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> 66
60
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Basic Agreement to be duly executed by their respective officers, all as
of the day and year first above written.
AMERICA WEST AIRLINES, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
FLEET NATIONAL BANK,
as Trustee
By:
---------------------------
Name:
-------------------------
Title:
------------------------
<PAGE> 67
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 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 June __, 1997 (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
____________________
(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> 68
2
assigned to them in the Agreement. This Certificate is one of the duly
authorized Certificates designated as "America West 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 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
<PAGE> 69
3
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 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
<PAGE> 70
4
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth, 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 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> 71
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> 72
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 4.6
This Trust Supplement No. 1997-1A, dated as of June __, 1997 (herein
called the "Trust Supplement"), between America West Airlines, Inc., a Delaware
corporation (the "Company"), and Fleet National Bank, as trustee (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June __, 1997,
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 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 1997-1A (the "1997-1A Trust") for the benefit of
the Certificateholders, and the initial Certificateholders as the grantors of
the 1997-1A Trust, by their respective acceptances of the Certificates, join in
the creation of this 1997-1A 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:
<PAGE> 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 1997-1A" (hereinafter
defined as the "Series 1997-1A Certificates"). Each Series 1997-1A Certificate
represents a Fractional Undivided Interest in the 1997-1A Trust created hereby.
The terms and conditions applicable to the Series 1997-1A Certificates
are as follows:
(a) The aggregate principal amount of the Series 1997-1A
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1997-1A Certificates authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of other Series 1997-1A Certificates pursuant to Sections
3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $___________. [The parties hereto acknowledge that the
provisions of Section 2.02(b) of the Basic Agreement are of no force
or effect with respect to the Series 1997-1A Certificates.]
(b) The Regular Distribution Dates with respect to any
payment of Scheduled Payments means each January 2 and July 2
commencing [July 2, 1997], until payment of all of the Scheduled
Payments to be made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is _________, ____.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice which the
Trustee must give with respect to such Special Payment pursuant to
Section 4.02(c) of the Basic Agreement, which date shall be the date
specified as the Special Distribution Date (as defined in the
Intercreditor Agreement) with respect to the related Special Payment
(as defined in the Intercreditor Agreement) in the applicable written
notice given to the Trustee pursuant to Section 2.4(a) of the
Intercreditor Agreement.
(e) (i) The Series 1997-1A Certificates shall be
substantially in the form attached hereto as Exhibit A
(ii) The Series 1997-1A Certificates shall be Book-Entry
Certificates.
Series 1997-1A Trust Supplement
<PAGE> 3
3
(f) The Scheduled Payments of principal shall be as set forth in Exhibit B.
(g) The proceeds of the Series 1997-1A Certificates shall be
used to purchase the Series A Equipment Notes in the principal amount
specified below:
<TABLE>
<CAPTION>
Equipment Note Principal Amount Maturity
-------------- ---------------- --------
<S> <C>
N628AW-A $
N627AW-A
N629AW-A
N632AW-A
</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 Aircraft:
<TABLE>
<CAPTION>
U.S. Registration Number/Manufacturer's
Aircraft Serial Number
-------- ---------------------
<S> <C>
Airbus A320-231 N628AW/067
Airbus A320-231 N627AW/066
Airbus A320-231 N629AW/076
Airbus A320-231 N632AW/081
</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 1997-1A Certificates are
senior in right of payment to the America West Airlines Pass Through
Certificates, Series 1997-1B, the America West Airlines Pass Through
Certificates, Series 1997-1C and the America West Airlines Pass
Through Certificates, Series 1997-1D.
(ii) The Series 1997-1A Certificates may be
purchased by the holders of certain series of Certificates with a
lower seniority as provided in Article III hereof and as further set
forth in Section 6.01(b) of the Basic Agreement.
Series 1997-1A Trust Supplement
<PAGE> 4
4
(k) Notice of any termination of the 1997-1A 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
with its terms.
Liquidity Facility: Means, initially, the Irrevocable Revolving Credit
Agreement dated as of June __, 1997, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the 1997-1A 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. 1997-1B dated the date hereof relating to America West
Airlines 1997-1B Pass Through Trust, (ii) the Basic Agreement as supplemented
by Trust Supplement No. 1997-1C dated the date hereof relating to America West
Airlines 1997-1C Pass Through Trust and (iii) the Basic Agreement as
supplemented by Trust Supplement No. 1997-1D dated the date hereof relating to
America West Airlines 1997-1D Pass Through Trust.
Other Trustees: Means the trustee under the Other Agreements, and any
successor or other trustee appointed as provided therein.
PTC Event of Default: Means the failure to pay within 10 Business Days
of the due date thereof: (i) the outstanding Pool Balance of the Series 1997-1A
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
Series 1997-1A Trust Supplement
<PAGE> 5
5
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.
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 1997-1A
Certificates upon ten days' written notice to the Trustee and each
other Class B Certificateholder, provided that (A) if prior to the end
of such ten-day period any other Class B Certificateholder notifies
such purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such
other Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase all, but not less than all, of the
Series 1997-1A 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
Series 1997-1A Trust Supplement
<PAGE> 6
6
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 1997-1A
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 1997-1A
Certificates pursuant to clause (i) above) to purchase all, but not
less than all, of the Series 1997-1A 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 1997- 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 1997-1A
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 1997-1A
Certificates pursuant to clause (i) above or the purchase of the
Series 1997-1A Certificates and the Class B Certificates pursuant to
clause (ii) above) to purchase all, but not less than all, of the
Series 1997-1A Certificates, the Class B Certificates and the Class C
Certificates upon ten days' written notice to the Trustee, the Class B
Trustee, the Class C Trustee and each other Class D Certificateholder,
provided that (A) if prior to the end of such ten-day period any other
Class D Certificateholder notifies such purchasing Class D
Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D
Certificateholder may join with the purchasing Certificateholder to
purchase all, but not less than all, of the Series 1997-1A
Certificates, the Class B Certificates and the Class C Certificates
pro rata based on the
Series 1997-1A Trust Supplement
<PAGE> 7
7
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 1997-1A Certificates, the Class B Certificates, and the
Class C Certificates pursuant to this Section and Section 6.01(b) of
the Basic Agreement; and
As used in this Article III, the terms "Class B Certificate", "Class B
Certificateholder", "Class B Trust", "Class B Trustee", "Class C Certificate",
"Class C Certificateholder", "Class C Trust", "Class C Trustee", "Class D
Certificate", "Class D Certificateholder" and "Class D Trust" shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance
Date in the form delivered to the Trustee by the Company. The Trustee shall not
be responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the
Company, or for or in respect of the recitals and statements contained herein,
all of which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed by the Trustee by reason of this Trust Supplement other than as set
forth in the Basic Agreement, and this Trust Supplement is executed and
accepted on behalf of the Trustee, subject to all the terms and conditions set
forth in the Basic Agreement, upon the effectiveness thereof, as fully to all
intents as if the same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is
duly authorized to execute and deliver such document on its behalf.
Series 1997-1A Trust Supplement
<PAGE> 8
8
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
1997-1A 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 1997-1A 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 1997-1A Trust Supplement
<PAGE> 10
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.(1)
AMERICA WEST AIRLINES PASS THROUGH TRUST 1997-1A
Pass Through Certificate,
Series 1997-1A
Issuance Date: June ___, 1997
Final Legal Distribution Date: ______________
Evidencing A Fractional Undivided Interest In the 1997-1A Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft Leased To America West Airlines, Inc.
Certificate No.___ $_____________ Fractional Undivided Interest representing
0._ % of the Trust per $1,000 of Reference Principal Amount
CUSIP No. _____________
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 1997-1A (the "Trust") created by Fleet
National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of June __, 1997 (the "Basic Agreement"), between the
Trustee and America West Airlines, Inc., a Delaware corporation (the
"Company"), as supplemented by Trust Supplement No. 1997-1A thereto, dated as
of June __, 1997 (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,
- ------------------
(1) Not necessarily applicable in respect of one Certificate in
definitive form.
Series 1997-1A Trust Supplement
<PAGE> 11
2
Series 1997-1A" (herein called the "Certificates"). This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement
and the Intercreditor Agreement, to which agreements the Certificateholder of
this Certificate by virtue of the acceptance hereof assents and by which such
Certificateholder is bound. The property of the Trust includes certain
Equipment Notes and all rights of the Trust to receive payments under the
Intercreditor Agreement and the Liquidity Facility (the "Trust Property"). Each
issue of the Equipment Notes is secured by a security interest in the Aircraft
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 1997-1A, 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 1997-1A and (y) the aggregate original principal amounts
of the Equipment Notes constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement
and the Intercreditor Agreement, from funds then available to the Trustee,
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date") commencing [July 2, 1997] to the Person in whose name this Certificate
is registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate is registered at the close of business on the 15th
day preceding the Special Distribution Date, an amount in respect of such
Special Payments on the Equipment Notes, the receipt of which has been
confirmed by the Trustee, equal to the product of the percentage interest in
the Trust evidenced by this Certificate and an amount equal to the sum of such
Special Payments so received. If a Regular Distribution Date or Special
Distribution Date is not a Business Day, distribution shall be made on the
immediately following Business Day with the same
Series 1997-1A Trust Supplement
<PAGE> 12
3
force and effect as if made on such Regular Distribution Date or Special
Distribution Date and no interest shall accrue during the intervening period.
The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent an obligation of, or an
obligation guaranteed by, or an interest in, the Company or the Trustee or any
affiliate thereof. The Certificates are limited in right of payment, all as
more specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Certificateholders under the
Agreement at any time by the Company and the Trustee with the consent of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust. Any
such consent by the Certificateholder of this Certificate shall be conclusive
and binding on such Certificateholder and upon all future Certificateholders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment
Series 1997-1A Trust Supplement
<PAGE> 13
4
thereof, in certain limited circumstances, without the consent of the
Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in its capacity as
Registrar, or by any successor Registrar, duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Registrar, duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing, and thereupon one or
more new Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 Fractional Undivided Interests and
integral multiples thereof, provided that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee shall require payment of a sum sufficient
to cover any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or
the Registrar may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Trustee, the Registrar,
nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant
to the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
Series 1997-1A Trust Supplement
<PAGE> 14
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES
PASS THROUGH TRUST 1997-1A
By: FLEET NATIONAL BANK,
as Trustee
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Dated:
------------
Series 1997-1A 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 1997-1A Trust Supplement
<PAGE> 16
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
------------------------- -----------------
<S> <C>
July 2, 1997 $
January 2, 1998
July 2, 1998
January 2, 1999
July 2, 1999
January 2, 2000
July 2, 2000
January 2, 2001
July 2, 2001
January 2, 2002
July 2, 2002
January 2, 2003
July 2, 2003
January 2, 2004
July 2, 2004
January 2, 2005
July 2, 2005
January 2, 2006
July 2, 2006
January 2, 2007
July 2, 2007
January 2, 2008
July 2, 2008
January 2, 2009
July 2, 2009
</TABLE>
Series 1997-1A Trust Supplement
<PAGE> 17
EXHIBIT C
Related Note Documents
Series 1997-1A Trust Supplement
<PAGE> 1
Exhibit 4.7
This Trust Supplement No. 1997-1B, dated as of June __, 1997 (herein
called the "Trust Supplement"), between America West Airlines, Inc., a Delaware
corporation (the "Company"), and Fleet National Bank, as trustee (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June __, 1997,
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 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 1997-1B (the "1997-1B Trust") for the benefit of
the Certificateholders, and the initial Certificateholders as the grantors of
the 1997-1B Trust, by their respective acceptances of the Certificates, join in
the creation of this 1997-1B 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;
<PAGE> 2
2
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1997-1B" (hereinafter
defined as the "Series 1997-1B Certificates"). Each Series 1997-1B Certificate
represents a Fractional Undivided Interest in the 1997-1B Trust created hereby.
The terms and conditions applicable to the Series 1997-1B Certificates
are as follows:
(a) The aggregate principal amount of the Series 1997-1B
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1997-1B Certificates authenticated
and delivered upon registration of transfer of, or in exchange for, or
in lieu of other Series 1997-1B Certificates pursuant to Sections
3.03, 3.04 and 3.05 of the Basic Agreement) upon their initial
issuance is $__________. [The parties hereto acknowledge that the
provisions of Section 2.02(b) of the Basic Agreement are of no force
or effect with respect to the Series 1997-1B Certificates.]
(b) The Regular Distribution Dates with respect to any
payment of Scheduled Payments means each January 2 and July 2
commencing [July 2, 1997], until payment of all of the Scheduled
Payments to be made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is __________.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
(e) (i) The Series 1997-1B Certificates shall be
substantially in the form attached hereto as Exhibit A. Each
purchaser of Series 1997-1B Certificates will be deemed
Series 1997-1B Trust Supplement
<PAGE> 3
3
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 1997-1B Certificates or (B) the purchase
and holding of Series 1997-1B Certificates is exempt from the
prohibited transaction restrictions of ERISA and the Code pursuant to
Prohibited Transaction Class Exemption 95-60 (promulgated under ERISA
and the Code).
(ii ) The Series 1997-1B Certificates shall be Book-Entry Certificates.
(f) The Scheduled Payments of principal shall be as set forth
in Exhibit B.
(g) The proceeds of the Series 1997-1B 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>
N628AW - B __________ __________
N627AW - B __________ __________
N629AW - B __________ __________
N632AW - B __________ __________
</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 Aircraft:
<TABLE>
<CAPTION>
U.S. Registration
Number/Manufacturer's
Aircraft Serial Number
-------- ---------------------
<S> <C>
Airbus A320-231 N628AW/067
Airbus A320-231 N627AW/066
Airbus A320-231 N629AW/076
Airbus A320-231 N632AW/081
</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 1997-1B Trust Supplement
<PAGE> 4
4
certain terms of subordination and other matters. The Series 1997-1B
are junior in right of payment to the America West Airlines Pass
Through Certificates, Series 1997-1A and senior in right of payment to
the America West Airlines Pass Through Certificates, Series 1997-1C
and the America West Airlines Pass Through Certificates, Series
1997-1D.
(ii) The holders of Series 1997-1B Certificates may
purchase America West Airlines Pass Through Certificates, Series
1997-1A and the Series 1997-1B 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 1997-1B Trust
shall be mailed promptly by the Trustee to Certificateholders not
earlier than the 60th day and not later than the 20th day next
preceding such final distribution.
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 June __, 1997, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the 1997-1B 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. 1997-1A dated the date hereof relating to America West
Airlines 1997-1A Pass Through Trust, (ii) the Basic Agreement as supplemented
by Trust Supplement No. 1997-1C dated the date hereof relating to America
Series 1997-1B Trust Supplement
<PAGE> 5
5
West Airlines 1997-1C Pass Through Trust and (iii) the Basic Agreement as
supplemented by Trust Supplement No. 1997-1D dated the date hereof relating to
America West Airlines 1997-1D 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 1997-1B
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 1997-1B
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.
Underwriter: Means Morgan Stanley & Co. Incorporated.
Series 1997-1B Trust Supplement
<PAGE> 6
6
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 1997-1B 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 1997-1B Certificates pro rata
based on the Fractional Undivided Interest in the Class C Trust held
by each such Class C Certificateholder and (B) if prior to the end of
such ten day period any other Class C Certificateholder fails to
notify the purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then
such other Class C Certificateholder shall lose its right to purchase
the Class A Certificates
Series 1997-1B Trust Supplement
<PAGE> 7
7
and Series 1997-1B 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 1997-1B Certificates pursuant to clause
(ii)(1) above) to purchase all, but not less than all, of the Class A
Certificates, the Series 1997-1B 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 1997-1B 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 1997-1B Certificates, and the
Class C Certificates pursuant to this Section and Section 6.01(b) of
the Basic Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", "Class C Certificate", "Class C Certificateholder", "Class C Trust",
"Class C Trustee", "Class D Certificate", "Class D Certificateholder" and
"Class D Trust" shall have the respective meanings assigned to such terms in
the Intercreditor Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to execute
and deliver the Intercreditor Agreement on or prior to the Issuance Date in the
form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company,
or for or in respect of the recitals and statements contained herein, all of
which recitals and statements are made solely by the Company.
Series 1997-1B Trust Supplement
<PAGE> 8
8
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed by the Trustee by reason of this Trust Supplement other than as set
forth in the Basic Agreement, and this Trust Supplement is executed and
accepted on behalf of the Trustee, subject to all the terms and conditions set
forth in the Basic Agreement, upon the effectiveness thereof, as fully to all
intents as if the same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is
duly authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the
same instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1997-1B 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 1997-1B 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 1997-1B Trust Supplement
<PAGE> 10
EXHIBIT A
FORM OF CERTIFICATE
[Include on each Certificate that is a Global Certificate: UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.](1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE
COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE,
AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY
THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1997-1B
Pass Through Certificate,
Series 1997-1B
Issuance Date: June __, 1997
Final Legal Distribution Date: __________
Evidencing A Fractional Undivided Interest In the 1997-1B Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft Leased To America West Airlines, Inc.
Certificate No.___ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. __________
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 1997-1B (the "Trust") created by Fleet
National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of June __, 1997 (the "Basic Agreement"),
____________________
(1) Not necessarily applicable in respect of one Certificate in
definitive form.
<PAGE> 11
2
between the Trustee and America West Airlines, Inc., a Delaware corporation
(the "Company"), as supplemented by Trust Supplement No. 1997-1B thereto, dated
as of June __, 1997 (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 1997-1B" (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 Aircraft 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 1997-1B, 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
1997-1B and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will
be distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing [July 2, 1997] to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate
Series 1997-1B Trust Supplement
<PAGE> 12
3
is registered at the close of business on the 15th day preceding the Special
Distribution Date, an amount in respect of such Special Payments on the
Equipment Notes, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period. The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any
time by the Company
Series 1997-1B Trust Supplement
<PAGE> 13
4
and the Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed
by the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be
Series 1997-1B Trust Supplement
<PAGE> 14
5
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES
PASS THROUGH TRUST 1997-1B
By: FLEET NATIONAL BANK,
as Trustee
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Dated:
--------------
Series 1997-1B 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 1997-1B Trust Supplement
<PAGE> 16
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
------------------------- -----------------
<S> <C>
July 2, 1997 $
January 2, 1998
July 2, 1998
January 2, 1999
July 2, 1999
January 2, 2000
July 2, 2000
January 2, 2001
July 2, 2001
January 2, 2002
July 2, 2002
January 2, 2003
July 2, 2003
January 2, 2004
July 2, 2004
January 2, 2005
July 2, 2005
January 2, 2006
July 2, 2006
January 2, 2007
July 2, 2007
January 2, 2008
July 2, 2008
January 2, 2009
July 2, 2009
</TABLE>
Series 1997-1B Trust Supplement
<PAGE> 17
EXHIBIT C
Related Note Documents
Series 1997-1B Trust Supplement
<PAGE> 1
Exhibit 4.8
This Trust Supplement No. 1997-1C, dated as of June __, 1997 (herein
called the "Trust Supplement"), between America West Airlines, Inc., a Delaware
corporation (the "Company"), and Fleet National Bank, as trustee (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June __, 1997,
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 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 1997-1C (the "1997-1C Trust") for the benefit of
the Certificateholders, and the initial Certificateholders as the grantors of
the 1997-1C Trust, by their respective acceptances of the Certificates, join in
the creation of this 1997-1C Trust with the Trustee;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and delivery of this
Trust Supplement in the form and with the terms hereof have been in all
respects duly authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable,
be governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
Series 1997-1C Trust Supplement
<PAGE> 2
2
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1997-1C" (hereinafter
defined as the "Series 1997-1C Certificates"). Each Series 1997-1C Certificate
represents a Fractional Undivided Interest in the 1997-1C Trust created hereby.
The terms and conditions applicable to the Series 1997-1C Certificates
are as follows:
(a) The aggregate principal amount of the Series 1997-1C
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1997-1C Certificates authenticated
and delivered upon registration of transfer for, or in lieu of, other
Series 1997-1C Certificates pursuant to Sections 3.03, 3.04 and 3.05
of the Basic Agreement) upon their initial issuance is $__________.
[The parties hereto acknowledge that the provisions of Section 2.02(b)
of the Basic Agreement are of no force or effect with respect to the
Series 1997-1C Certificates.]
(b) The Regular Distribution Dates with respect to any
payment of Scheduled Payments means each January 2 and July 2
commencing [July 2, 1997], until payment of all of the Scheduled
Payments to be made under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is __________.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
(e) (i) The Series 1997-1C Certificates shall be
substantially in the form attached hereto as Exhibit A. Each
purchaser of Series 1997-1C 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
Series 1997-1C Trust Supplement
<PAGE> 3
3
1986, as amended (the "Code"), have not been used to purchase Series
1997-1C Certificates or (B) the purchase and holding of Series 1997-1C
Certificates is exempt from the prohibited transaction restrictions of
ERISA and the Code pursuant to Prohibited Transaction Class Exemption
95-60 (promulgated under ERISA and the Code).
(ii) The Series 1997-1C Certificates shall be Book-Entry
Certificates.
(f) The Scheduled Payments of principal shall be as set
forth in Exhibit B.
(g) The proceeds of the Series 1997-1C 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>
N628AW-C $
N627AW-C
N629AW-C
N632AW-C
</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 Aircraft:
<TABLE>
<CAPTION>
U.S. Registration Number/Manufacturer's
Aircraft Serial Number
-------- ---------------------
<S> <C>
Airbus A320-231 N628AW/067
Airbus A320-231 N627AW/066
Airbus A320-231 N629AW/076
Airbus A320-231 N632AW/081
</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 1997-1C are junior in
right of payment to the America West Airlines Pass Through
Certificates, Series 1997-1A and the America West Airlines Pass
Through Certificates, Series
Series 1997-1C Trust Supplement
<PAGE> 4
4
1997-1B and senior in right of payment to the America West Airlines
Pass Through Certificates, Series 1997-1D.
(ii) The holders of Series 1997-1C Certificates may
purchase America West Airlines Pass Through Certificates, Series
1997-1A and America West Airlines Pass Through Certificates, Series
1997-1B and the Series 1997-1C 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 1997-1C Trust
shall be mailed promptly by the Trustee to Certificateholders not
earlier than the 60th day and not later than the 20th day next
preceding such final distribution.
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 June __, 1997, between Fleet National Bank, as
Subordination Agent, as agent and trustee for the 1997-1C 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. 1997-1A dated the date hereof relating to America West
Airlines 1997-1A Pass Through Trust, (ii) the Basic Agreement as supplemented
by Trust Supplement No. 1997-1B dated the date hereof relating to America West
Airlines 1997-1B Pass Through Trust and (iii) the Basic Agreement as
supplemented by Trust Supplement No.1997-1D dated
Series 1997-1C Trust Supplement
<PAGE> 5
5
the date hereof relating to America West Airlines 1997-1D 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 1997-1C
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 1997-1C
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.
Underwriter: Means Morgan Stanley & Co. Incorporated.
Series 1997-1C Trust Supplement
<PAGE> 6
6
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 1997-1C
Certificates upon ten days' written notice to the Class A Trustee, the
Class B Trustee, the Trustee and each other Class D Certificateholder,
provided that (A) if prior to the end of such ten-day period any other
Class D Certificateholder notifies such purchasing Class D
Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D
Certificateholder may join with the purchasing Certificateholder to
purchase all, but not less than all, of the Class A Certificates, the
Class B Certificates and the Series 1997-1C 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
Series 1997-1C Trust Supplement
<PAGE> 7
7
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 1997-1C
Certificates pursuant to this Section and Section 6.01(b) of the Basic
Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", ""Class B Certificate", "Class B Trust Agreement", "Class B Trustee",
"Class D Certificate", "Class D Certificateholder" and "Class D Trust" shall
have the respective meanings assigned to such terms in the Intercreditor
Agreement.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to
execute and deliver the Intercreditor Agreement on or prior to the Issuance
Date in the form delivered to the Trustee by the Company. The Trustee shall not
be responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the
Company, or for or in respect of the recitals and statements contained herein,
all of which recitals and statements are made solely by the Company.
Except as herein otherwise provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed by the Trustee by reason of this Trust Supplement other than as set
forth in the Basic Agreement, and this Trust Supplement is executed and
accepted on behalf of the Trustee, subject to all the terms and conditions set
forth in the Basic Agreement, upon the effectiveness thereof, as fully to all
intents as if the same were herein set forth at length.
The Trustee represents and warrants that the Intercreditor
Agreement will be duly executed and delivered by one of its officers who is
duly authorized to execute and deliver such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Basic Agreement Ratified. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement
Series 1997-1C Trust Supplement
<PAGE> 8
8
shall be taken, read and construed as one and the same instrument.
Section 5.02. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
1997-1C 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 1997-1C 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 1997-1C 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 AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.(1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE
COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE,
AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY
THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1997-1C
Pass Through
Certificate, Series 1997-1C
Issuance Date: June __, 1997
Final Legal Distribution Date: __________
Evidencing A Fractional Undivided Interest In the 1997-1C Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft Leased To America West Airlines, Inc.
Certificate No.___ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. __________
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 1997-1C Pass Through Trust 1997-1C (the "Trust") created
by Fleet National Bank, as trustee (the "Trustee"), pursuant to a Pass Through
Trust Agreement, dated as of June __, 1997 (the "Basic
- ---------------
(1) Not necessarily applicable in respect of one Certificate in definitive
form.
<PAGE> 11
2
Agreement"), between the Trustee and America West Airlines, Inc., a Delaware
corporation (the "Company"), as supplemented by Trust Supplement No. 1997-1C
thereto, dated as of June __, 1997 (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 1997-1C"
(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 Aircraft
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 1997-1C, 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
1997-1C and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will
be distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing [July 2, 1997] to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special Distribution Date, to the Person in
whose name this Certificate
Series 1997-1C Trust Supplement
<PAGE> 12
3
is registered at the close of business on the 15th day preceding the Special
Distribution Date, an amount in respect of such Special Payments on the
Equipment Notes, the receipt of which has been confirmed by the Trustee, equal
to the product of the percentage interest in the Trust evidenced by this
Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the
intervening period. The Trustee shall mail notice of each Special Payment and
the Special Distribution Date therefor to the Certificateholder of this
Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificate holders under the Agreement at any
time by the Company
Series 1997-1C Trust Supplement
<PAGE> 13
4
and the Trustee with the consent of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and upon
all future Certificateholders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Certificateholders of any of the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed
by the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be
Series 1997-1C Trust Supplement
<PAGE> 14
5
distributed to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
AMERICA WEST AIRLINES PASS
THROUGH TRUST 1997-1C
By: FLEET NATIONAL BANK,
as Trustee
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Dated:
------------
Series 1997-1C 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 1997-1C Trust Supplement
<PAGE> 16
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
------------------------- -----------------
<S> <C>
July 2, 1997 $
January 2, 1998
July 2, 1998
January 2, 1999
July 2, 1999
January 2, 2000
July 2, 2000
January 2, 2001
July 2, 2001
January 2, 2002
July 2, 2002
January 2, 2003
July 2, 2003
January 2, 2004
July 2, 2004
</TABLE>
Series 1997-1C Trust Supplement
<PAGE> 17
EXHIBIT C
Related Note Documents
Series 1997-1C Trust Supplement
<PAGE> 1
Exhibit 4.9
This Trust Supplement No. 1997-1D, dated as of June __, 1997 (herein
called the "Trust Supplement"), between America West Airlines, Inc., a Delaware
corporation (the "Company"), and Fleet National Bank, as trustee (the
"Trustee"), to the Pass Through Trust Agreement, dated as of June __, 1997,
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 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 1997-1D (the "1997-1D Trust") for the benefit of
the Certificateholders, and the initial Certificateholders as the grantors of
the 1997-1D Trust, by their respective acceptances of the Certificates, join in
the creation of this 1997-1D 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;
Series 1997-1D Trust Supplement
<PAGE> 2
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. The Certificates. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"America West Airlines Pass Through Certificates, Series 1997-1D" (hereinafter
defined as the "Series 1997-1D Certificates"). Each Series 1997-1D Certificate
represents a Fractional Undivided Interest in the 1997-1D Trust created hereby.
The terms and conditions applicable to the Series 1997-1D Certificates
are as follows:
(a) The aggregate principal amount of the Series 1997-1D
Certificates that shall be authenticated under the Agreement (which
limit shall not pertain to Series 1997-1D Certificates authenticated and
delivered upon registration of transfer for, or in lieu of, other Series
1997-1D Certificates pursuant to Sections 3.03, 3.04 and 3.05 of the
Basic Agreement) upon their initial issuance is $____________. [The
parties hereto acknowledge that the provisions of Section 2.02(b) of the
Basic Agreement are of no force or effect with respect to the Series
1997-1D Certificates.]
(b) The Regular Distribution Dates with respect to any payment
of Scheduled Payments means each January 2 and July 2 commencing [July
2, 1997], until payment of all of the Scheduled Payments to be made
under the Equipment Notes has been made.
(c) The Final Legal Distribution Date is ____________.
(d) The Special Distribution Date with respect to a Special
Payment shall be the date specified as such in the notice the Trustee
must give with respect to such Special Payment pursuant to Section
4.02(c) of the Basic Agreement, which date shall be the date specified
as the Special Distribution Date (as defined in the Intercreditor
Agreement) with respect to the related Special Payment (as defined in
the Intercreditor Agreement) in the applicable written notice given to
the Trustee pursuant to Section 2.4(a) of the Intercreditor Agreement.
Series 1997-1D Trust Supplement
<PAGE> 3
3
(e) (i) The Series 1997-1D Certificates shall be substantially
in the form attached hereto as Exhibit A. Each purchaser of Series
1997-1D 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 1997-1D
Certificates or (B) the purchase and holding of Series 1997-1D
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 1997-1D Certificates shall be Book-Entry
Certificates.
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit B.
(g) The proceeds of the Series 1997-1D 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>
N628AW-D $
N627AW-D
N629AW-D
N632AW-D
</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 Aircraft:
Series 1997-1D Trust Supplement
<PAGE> 4
4
<TABLE>
<CAPTION>
U.S. Registration
Number/Manufacturer's
Aircraft Serial Number
-------- ---------------------
<S> <C>
Airbus A320-231 N628AW/067
Airbus A320-231 N627AW/066
Airbus A320-231 N629AW/076
Airbus A320-231 N632AW/081
</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 1997-1D are junior in right of payment to
the America West Airlines Pass Through Certificates, Series 1997-1A, the
America West Airlines Pass Through Certificates, Series 1997-1B and the
America West Pass Through Certificates, Series 1997-1C.
(ii) The holders of Series 1997-1D Certificates may
purchase America West Airlines Pass Through Certificates, Series 1997-
1A, America West Airlines Pass Through Certificates, Series 1997-1B and
America West Pass Through Certificates, Series 1997-1C.
(k) Notice of the termination of the Series 1997-1D 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, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
Series 1997-1D Trust Supplement
<PAGE> 5
5
Other Agreements: Means (i) the Basic Agreement as supplemented by
Trust Supplement No. 1997-1A dated the date hereof relating to America West
Airlines 1997-1A Pass Through Trust, (ii) the Basic Agreement as supplemented
by Trust Supplement No. 1997-1B dated the date hereof relating to America West
Airlines 1997-1B Pass Through Trust and (iii) the Basic Agreement as
supplemented by Trust Supplement No.1997-1C dated the date hereof relating to
America West Airlines 1997-1C 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 1997-1D
Certificate. For purposes of this definition, a "Plan" means any employee
benefit plan subject to ERISA as well as any plan that is not subject to ERISA
but which is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended.
PTC Event of Default: Means any failure to pay within 10 Business Days
of the due date thereof: (i) the outstanding Pool Balance on the Final Legal
Distribution Date for such series specified in the related Trust Supplement or
(ii) interest due on such Certificates on any Distribution Date.
Special Payment: Means any payment (other than a Scheduled Payment) in
respect of, or any proceeds of, any Equipment Note or Trust Indenture Estate
(as defined in each Indenture), including Overdue Scheduled Payments (as
defined in the Intercreditor Agreement), payments in respect of the redemption
or repurchase of any Equipment Note and payments in respect of the sale, of any
Equipment Note to the related Owner Trustee, Owner Participant or any other
Person.
Trust Property: Means (i) the Equipment Notes held as the property of
the Trust and all monies at any time paid thereon and all monies due and to
become due thereunder, (ii) funds from time to time deposited in the
Certificate Account and the Special Payments Account, and (iii) all rights of
the Trust and the Trustee, on behalf of the Trust 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.
Series 1997-1D Trust Supplement
<PAGE> 6
6
ARTICLE III
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Section 3.01. At any time after the occurrence and during the
continuation of a Triggering Event, each Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates pursuant
to the Class B Trust Agreement or the purchase of the Class A Certificates and
the Class B Certificates pursuant to the Class C Trust Agreement) to purchase
all, but not less than all, of the Class A Certificates, the Class B
Certificates and the Class C Certificates upon ten days' written notice to the
Class A Trustee, the Class B Trustee, the Class C Trustee and each other
Certificateholder, provided that (A) if prior to the end of such ten day period
any other Certificateholder notifies such purchasing Certificateholder that
such other Certificateholder wants to participate in such purchase, then such
other Certificateholder may join with the purchasing Certificateholder to
purchase all, but not less than all, of the Class A Certificates, the Class B
Certificates and the Class C Certificates pro rata based on the outstanding
principal amount of the Certificates held by each such Certificateholder and
(B) if prior to the end of such ten-day period any other Certificateholder
fails to notify the purchasing Certificateholder of such other
Certificateholder's desire to participate in such a purchase, then such other
Certificateholder shall lose its right to purchase the Class A Certificates,
Class B Certificates and the Class C Certificates pursuant to this Section and
Section 6.01(b) of the Basic Agreement.
As used in this Article III, the terms "Class A Certificate", "Class A
Trustee", ""Class B Certificate", "Class B Trust Agreement", "Class B Trustee",
"Class C Certificate", "Class C Trust Agreement" and "Class C 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
Series 1997-1D Trust Supplement
<PAGE> 7
7
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
1997-1D 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 1997-1D 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 1997-1D 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 AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN].(1)
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE TRUST AGREEMENT) OR (B) IT IS AN INSURANCE
COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS CERTIFICATE,
AND THE CONDITIONS OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ISSUED BY
THE U.S. DEPARTMENT OF LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS CERTIFICATE. THE TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
AMERICA WEST AIRLINES PASS THROUGH TRUST 1997-1D
Pass Through
Certificate, Series 1997-1D
Issuance Date: June __, 1997
Final Legal Distribution Date: ________________
Evidencing A Fractional Undivided Interest In the 1997-1D Trust, The
Property Of Which Includes Certain Equipment Notes Each Secured By An
Aircraft Leased To America West Airlines, Inc.
Certificate No.___ $_____________ Fractional Undivided Interest
representing 0._ % of the Trust per $1,000 of
Reference Principal Amount
CUSIP No. ___________
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 1997-1D (the "Trust") created by Fleet
National Bank, as trustee (the "Trustee"), pursuant to a Pass Through Trust
Agreement, dated as of June __, 1997 (the "Basic Agreement"),
- ---------------
(1) Not necessarily applicable in respect of one Certificate in definitive
form.
<PAGE> 10
2
between the Trustee and America West Airlines, Inc., a Delaware corporation
(the "Company"), as supplemented by Trust Supplement No. 1997-1D thereto, dated
as of June __, 1997 (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 1997-1D" (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 Aircraft 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 1997-1D, 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
1997-1D and (y) the aggregate original principal amounts of the Equipment Notes
constituting the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will
be distributed on each January 2 and July 2 (a "Regular Distribution Date")
commencing [July 2, 1997] to the Person in whose name this Certificate is
registered at the close of business on the 15th day preceding the Regular
Distribution Date, an amount in respect of the Scheduled Payments on the
Equipment Notes due on such Regular Distribution Date, the receipt of which has
been confirmed by the Trustee, equal to the product of the percentage interest
in the Trust evidenced by this Certificate and an amount equal to the sum of
such Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Equipment Notes are
received by the Trustee, from funds then available to the Trustee, there shall
be distributed on the applicable Special
Series 1997-1D Trust Supplement
<PAGE> 11
3
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 shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto, without the presentation or surrender of
this Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Certificate will be made after notice mailed by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
The Certificates do not represent an obligation of, or an obligation
guaranteed by, or an interest in, the Company or the Trustee or any affiliate
thereof. The Certificates are limited in right of payment, all as more
specifically set forth herein and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the entire Agreement and reference is
made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds, and duties evidenced hereby. A copy of the
Agreement may be examined during normal business hours at the principal office
of the Trustee, and at such other places, if any, designated by the Trustee, by
any Certificateholder upon request.
Series 1997-1D Trust Supplement
<PAGE> 12
4
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.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed
by the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in
the Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 Fractional Undivided Interests and integral
multiples thereof, provided, that one Certificate may be in a different
denomination. As provided in the Agreement and subject to certain limitations
therein set forth, the Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust, as requested by the Certificateholder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither
Series 1997-1D Trust Supplement
<PAGE> 13
5
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.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
AMERICA WEST AIRLINES PASS
THROUGH TRUST 1997-1D
By: FLEET NATIONAL BANK,
as Trustee
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Dated:
-----------------
Series 1997-1D 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 1997-1D Trust Supplement
<PAGE> 15
EXHIBIT B
REGULAR DISTRIBUTION DATES
AND
SCHEDULED PAYMENTS
<TABLE>
<CAPTION>
Regular Distribution Date Scheduled Payment
------------------------- -----------------
<S> <C>
July 2, 1997 $
January 2, 1998
July 2, 1998
January 2, 1999
July 2, 1999
January 2, 2000
July 2, 2000
January 2, 2001
July 2, 2001
January 2, 2002
July 2, 2002
</TABLE>
Series 1997-1D Trust Supplement
<PAGE> 16
EXHIBIT C
Related Note Documents
Series 1997-1D Trust Supplement
<PAGE> 1
Exhibit 4.10
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
Dated as of June __, 1997
between
FLEET NATIONAL BANK,
as Subordination Agent,
as agent and trustee for the
America West Airlines Pass Through Trust 1997-1A,
as Borrower
and
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Liquidity Provider
Relating to
America West Airlines Pass Through Trust 1997-1A
[_._]% America West Airlines Pass Through Certificates,
Series 1997-1A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <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 . . . . . . . . . . . 8
Section 2.7 Payments to the Liquidity Provider Under
the Intercreditor Agreement . . . . . . . . . . . . . 9
Section 2.8 Book Entries . . . . . . . . . . . . . . . . . . . . . 9
Section 2.9 Payments from Available Funds Only . . . . . . . . . . 9
ARTICLE III
OBLIGATIONS OF THE BORROWER . . . . . . . . . . 10
Section 3.1 Increased Costs . . . . . . . . . . . . . . . . . . . 10
Section 3.2 Capital Adequacy . . . . . . . . . . . . . . . . . . . 11
Section 3.3 Payments Free of Deductions . . . . . . . . . . . . . 12
Section 3.4 Payments . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Computations . . . . . . . . . . . . . . . . . . . . . 13
Section 3.6 Payment on Non-Business Days . . . . . . . . . . . . . 13
Section 3.7 Interest . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.8 Replacement of Borrower . . . . . . . . . . . . . . . 14
Section 3.9 Funding Loss Indemnification . . . . . . . . . . . . . 14
Section 3.10 Illegality . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . 15
Section 4.1 Conditions Precedent to Effectiveness of
Section 2.1 . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Conditions Precedent to Borrowing . . . . . . . . . . 18
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . 18
Section 5.1 Affirmative Covenants of the Borrower . . . . . . . . 18
Section 5.2 Negative Covenants of the Borrower . . . . . . . . . . 18
ARTICLE VI
FINAL ADVANCE . . . . . . . . . . . . . . 19
Section 6.1 Final Advance . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . 19
Section 7.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . 19
Section 7.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . 19
Section 7.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . 20
Section 7.4 Further Assurances . . . . . . . . . . . . . . . . . . 20
Section 7.5 Indemnification; Survival of Certain
Provisions . . . . . . . . . . . . . . . . . . . . . 20
Section 7.6 Liability of the Liquidity Provider . . . . . . . . . 21
Section 7.7 Costs, Expenses and Taxes . . . . . . . . . . . . . . 21
Section 7.8 Binding Effect; Participations . . . . . . . . . . . . 22
Section 7.9 Severability . . . . . . . . . . . . . . . . . . . . . 24
Section 7.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 24
Section 7.11 Submission to Jurisdiction; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . 24
Section 7.12 Execution in Counterparts . . . . . . . . . . . . . . 25
Section 7.13 Entirety . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.14 Headings; Section References . . . . . . . . . . . . 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES . . . . . . . . . . . . . . . . . . . . . . 25
Annex I - Interest Advance Notice of Borrowing
Annex II - Downgrade Advance Notice of Borrowing
Annex III - Notice of Automatic Reduction of Commitment
Annex IV - Notice of Replacement Borrower
</TABLE>
ii
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS A CERTIFICATES
dated as of June __, 1997 between FLEET NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement (each as defined below), as agent and trustee
for the Class A Trust (as defined below) (the "Borrower"), and KREDIETBANK,
N.V., acting through its New York Branch (the "Liquidity Provider").
W I T N E S S E T H
WHEREAS, pursuant to the Class A Trust Agreement (such term and
all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.1), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of
a portion of the interest on the Class A Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As used
in this Agreement and unless otherwise expressly indicated, or unless the
context clearly requires otherwise, the following capitalized terms shall have
the following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance or a
Downgrade Advance, as the case may be.
"Applicable Liquidity Rate" means the rates of interest specified
in Section 3.7 with respect to any Advance.
"Applicable Margin" means (x) with respect to any Downgrade
Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per
annum and (y) with respect to any other Advance including an Applied Downgrade
Advance 1.5% (150 basis points) per annum.
"Applied Downgrade Advance" means any amount in respect of a
Downgrade Advance withdrawn from the Class A Cash Collateral Account for the
purpose of paying interest on the Class A
<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(e) 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
as of 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 as 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 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-_____) 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.
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class A Certificates, that would be payable on the Class
A Certificates on each of the three successive semiannual Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two semiannual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class A
Certificates on such day and without regard to expected future payments of
principal on the Class A Certificates.
"Termination Date" means the earliest to occur of the following:
(i) the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of
4
<PAGE> 8
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",
"Closing Date", "Controlling Party", "Distribution Date", "Dollars or
$", "Equipment Notes", "Indenture", "Investment Earnings", "Lease",
"Liquidity Facility", "Moody's", "Operative Agreements", "Performing
Equipment Note", "Performing Note Deficiency", "Person", "Pool Balance",
"Rating Agency", "Refunding Agreement", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering
Event", "Trust", "Trust Agreements", "Trustee", "Underwriters",
"Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby
irrevocably agrees, on the terms and conditions hereinafter set forth, to make
Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until 12:00 Noon (New York City time) on the
Expiry Date (unless the obligations of the Liquidity Provider shall be earlier
terminated in accordance with the terms of Section
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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.
(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
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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 proposed 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
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 0.35% of the Commitment (as in effect on the
Effective Date). Such fee shall be payable on the Effective Date.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.40% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance is made and the
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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 III hereto) to the Liquidity
Provider (with a copy to America West) within two Business Days thereof. The
failure by the Borrower to furnish any such notice shall not affect such
automatic reduction of the Commitment.
(b) Termination. Upon the making of any Downgrade Advance or
Final Advance hereunder or the occurrence of the Termination Date, the
obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled
to request any further Borrowing hereunder.
Section 2.5 Repayments of Interest Advances or the Final
Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay,
or to cause to be paid, to the Liquidity Provider on each date on which the
Liquidity Provider shall make an Interest Advance or the Final Advance, an
amount equal to (a) the amount of such Interest Advance or the Final Advance
(any such Interest Advance or the Final Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and
2.9, unless otherwise waived by the Liquidity Provider, the Borrower shall be
obligated, without notice of an Advance or demand for repayment from the
Liquidity Provider (which notice and demand are hereby waived by the Borrower),
to repay the Liquidity Provider for all Interest Advances and Final Advances on
the same day as made and all Applied Downgrade Advances on the same day they
become Applied Downgrade Advances. The Borrower and the Liquidity Provider
agree that the repayment in full of each Interest Advance and the Final Advance
on the date such Interest Advance or the Final Advance is made and each Applied
Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower
by the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances. (a) Amounts
advanced hereunder in respect of a Downgrade Advance
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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.
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
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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) or to reduce the amount of any sum
received or receivable by the Liquidity Provider under this Agreement with
respect thereto, then, no later than 30 days after demand by the Liquidity
Provider, the Borrower shall pay, or cause to be paid, to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
increased cost or reduction. A certificate as to such increased cost or
reduction incurred by the Liquidity Provider as a result of any event mentioned
in clause (i), (ii) or (iii) above, prepared in
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reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section
3.1 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
determine that the adoption after the date hereof of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
after the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance after the date hereof
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, is generally applicable to all
banks domiciled in Belgium with branches in the United States and not related
to the financial condition of the Liquidity Provider and has the effect of
reducing the rate of return on the Liquidity Provider's capital as a
consequence of issuing or maintaining its commitment hereunder or its funding
or maintaining Advances to a level below that which the Liquidity Provider
could have achieved but for such adoption, change or compliance (taking into
consideration the Liquidity Provider's policies with respect to capital
adequacy) by an amount deemed by the Liquidity Provider to be material, then,
no later than 30 days after demand by the Liquidity Provider, the Borrower
shall pay to the Liquidity Provider, from time to time as specified by the
Liquidity Provider, additional amounts which shall be sufficient to compensate
the Liquidity Provider for such reduction in respect of issuing or maintaining
its commitment hereunder or its funding or maintaining Advances. A certificate
as to such additional amount describing the event which has the effect of
reducing the rate of return on the Liquidity Provider's capital, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider 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
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Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider further agrees that no amounts shall be
payable under this Section 3.2 unless the Liquidity Provider is charging its
other borrowers with whom it has agreements similar to this agreement the
amounts that are payable to the Liquidity Provider under this Section 3.2.
Section 3.3 Payments Free of Deductions. All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding any Taxes imposed on the overall net
income of the Liquidity Provider and excluding United States federal income tax
withholding to the extent such withholding is, or would be, actually imposed
upon payments to the Liquidity Provider as of the date of this Agreement (such
non-excluded taxes being referred to herein, collectively, as "Non-Excluded
Taxes" and, individually, as a "Non-Excluded Tax"). If any Non-Excluded Taxes
are required to be withheld from any amounts payable to the Liquidity Provider
under this Agreement, the amounts so payable to the Liquidity Provider shall be
increased to the extent necessary to yield to the Liquidity Provider (after
payment of all Non-Excluded Taxes and taxes imposed on the receipt of such
increase) interest or any other such amounts payable under this Agreement at
the rates or in the amounts specified in this Agreement. Whenever any Non-
Excluded Tax is payable by the Borrower, promptly thereafter the Borrower shall
send the Liquidity Provider certified copies of tax receipts evidencing such
payment by the Borrower. The Liquidity Provider agrees to provide to the
Borrower on or prior to the Effective Date, and from time to time thereafter
prior to the expiration of the effectiveness of and promptly upon the
occurrence of any event requiring a change in the most recent form previously
delivered by it (and prior to the immediately following due date of any payment
by the Borrower hereunder), to the extent that the Liquidity Provider is
legally entitled to do so, two original Internal Revenue Service Form 1001 or
4224, as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that the Liquidity Provider is completely exempt
from United States withholding tax on payments pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section
3.3 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
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Section 3.4 Payments. The Borrower shall make or cause to be
made each payment to the Liquidity Provider under this Agreement so as to cause
the same to be received by the Liquidity Provider not later than 1:00 P.M. (New
York City time) on the day when due. The Borrower shall make all such payments
in lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Bank of New York, One Wall
Street, New York, NY 10286, ABA No. 021-000-018, for the account of Kredietbank
New York, Account No. [802-3015618] (referencing America West Airlines 1997-1A
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
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payable pursuant to this Section 3.7 below the maximum rate permitted by
applicable law until the total amount of interest accrued equals the amount of
interest that would have accrued if such otherwise applicable interest rate as
set forth in this Section 3.7 had at all times been in effect. Nothing
contained in this Section 3.7 shall require the Borrower to pay any amount
under this Section 3.7 other than to the extent the Borrower shall have funds
available therefor.
(b) Each Advance will be either a Base Rate Advance or a LIBOR
Advance as provided in this Section. Each such Advance will be a Base Rate
Advance for the period from the date of its borrowing to (but excluding) the
third Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance;
provided that the Final Advance shall, until repaid in full, be a Base Rate
Advance and the Borrower may not convert the Final Advance into a LIBOR
Advance.
(c) Each Base Rate Advance shall bear interest at a per annum
rate equal to the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date and, in the event
of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of
interest accrued on the amount of principal repaid).
(d) Each LIBOR Advance shall bear interest during each Interest
Period at a per annum rate equal to the LIBOR Rate for such Interest Period
plus the Applicable Margin for such LIBOR Advance, payable in arrears on the
last day of such Interest Period and, in the event of the payment of principal
of such LIBOR Advance on a day other than such last day, on the date of such
payment (to the extent of interest accrued on the amount of principal repaid).
(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 IV
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.
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Section 3.9 Funding Loss Indemnification. The Borrower shall
pay to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider) to compensate it for any loss, cost, or expense incurred as
a result of:
(a) Any payment or prepayment of a LIBOR Advance on a date other
than the last day of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow a LIBOR Advance on the
date for borrowing specified in the relevant notice under Section 2.2 or
3.7.
Section 3.10 Illegality. Notwithstanding any other provision in
this Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of
the Liquidity Provider, requires immediate repayment; or (b) at the expiration
of the last Interest Period to expire before the effective date of any such
change or request. In the event any change of the nature described in the
preceding sentence shall make it unlawful or impossible for the Liquidity
Provider (or its Lending Office) to maintain or fund its Base Rate Advances,
the Liquidity Provider shall have the right to cause a Replacement Liquidity
Facility to be substituted for this Agreement, subject to (i) the satisfaction
of the conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to America West.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section
2.1. Section 2.1 of this Agreement shall become effective on and as of the
first date (the "Effective Date") on which the following conditions precedent
have been satisfied or waived:
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(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for
those documents delivered pursuant to paragraphs (v) and (vii) of this
Section 4.1(a)), and each in form and substance satisfactory to the
Liquidity Provider:
(i) This Agreement duly executed on behalf of the
Borrower;
(ii) The Intercreditor Agreement duly executed on
behalf of each of the parties thereto;
(iii) Counterparts (or certified copies thereof) of
each of the Operative Agreements (other than this Agreement and
the Intercreditor Agreement) which, when taken together, bear the
signatures of all of the respective parties thereto and which are
in full force and effect in accordance with their respective
terms;
(iv) A copy of the Prospectus and specimen copies of
the Class A Certificates;
(v) Evidence that, on the Effective Date, the Class
A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates will receive long-term
credit ratings from Moody's of not lower than A2, Baa2, Ba1 and
Ba3, respectively, and from Standard & Poor's of not lower than
AA-, A-, BBB- and BB, respectively;
(vi) An executed or a certified copy of each
document, instrument, certificate and opinion delivered pursuant
to the Class A Trust Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative Agreements (together
with, in the case of each such opinion (unless such opinion is
addressed to the Liquidity Provider), other than the opinion of
counsel for the Underwriters, a letter from the counsel rendering
such opinion to the effect that the Liquidity Provider is
entitled to rely on such opinion as if it were addressed to the
Liquidity Provider);
(vii) Evidence that there shall have been made and
shall be in full force and effect, all filings, recordings and/or
registrations, and there shall have been given or taken any
notice or other similar action as may be reasonably necessary or,
to the extent reasonably requested by the Liquidity Provider,
reasonably advisable, in order to establish, perfect, protect and
preserve the right, title and interest,
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remedies, powers, privileges, liens and security interests of, or
for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements;
(viii) Copies of the appraisals included in the
Prospectus;
(ix) A letter from America West agreeing to provide
to the Liquidity Provider the periodic financial reports referred
to in Section 8.04(a) of the Trust Agreements; and
(x) Such other documents, instruments, opinions and
approvals (and, if requested by the Liquidity Provider, certified
duplicates or executed copies thereof) as the Liquidity Provider
shall have reasonably requested.
(b) The following statements shall be true and shall be deemed
to have been represented by each party (other than clause (ii) below,
which shall be deemed to have been represented only by America West) to
the Refunding Agreements as being true on and as of the Effective Date:
(i) The representations and warranties of such
Person contained in each Refunding Agreement are true and correct
on and as of the Effective Date as though made on and as of the
Effective Date; and
(ii) No event has occurred and is continuing, or
would result from the entering into of this Agreement or the
making of any Advance, which constitutes a Liquidity Event of
Default.
(c) 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.
(d) 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).
(e) The Borrower shall have received a certificate, dated the
date hereof, signed by a duly authorized
17
<PAGE> 21
representative of the Liquidity Provider, certifying that all conditions
precedent to the effectiveness of Section 2.1 have been satisfied or
waived (other than this Section 4.1(e)).
Section 4.2 Conditions Precedent to Borrowing. The obligation
of the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and, except in the case of a Final Advance, prior to the date of such
Borrowing, the Borrower shall have delivered a Notice of Borrowing which
conforms to the terms and conditions of this Agreement and has been completed
as may be required by the relevant form of the Notice of Borrowing for the type
of Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long as
any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any
amount to the Liquidity Provider hereunder, the Borrower will, unless the
Liquidity Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider
with reasonable promptness, such information and data with respect to
the transactions contemplated by the Operative Agreements as from time
to time may be reasonably requested by the Liquidity Provider; and
permit the Liquidity Provider, upon reasonable notice, to inspect the
Borrower's books and records with respect to such transactions and to
meet with officers and employees of the Borrower to discuss such
transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written
consent of the Liquidity Provider:
18
<PAGE> 22
(a) Amendments. Modify, amend or supplement, or give any
consent to any modification, amendment, or supplement, or make any
waiver with respect to, any provision of the Trust Agreements or the
Intercreditor Agreement, except for any supplemental agreement to the
Trust Agreements provided for in Section 9.01 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed any
successor Borrower without the prior written approval of the Liquidity
Provider (which approval shall not be unreasonably withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a) both (i) a Triggering Event
shall have occurred and be continuing and (ii) a Performing Note Deficiency
exists or (b) a Liquidity Event of Default shall have occurred and be
continuing, the Liquidity Provider may, in its discretion, make a Final Advance
whereupon (i) the Liquidity Provider shall have no further obligation to make
Advances hereunder, (ii) all other outstanding Advances shall be automatically
converted into Final Advances for purposes of determining the Applicable
Liquidity Rate for interest payable thereon, and (iii) subject to Sections 2.7
and 2.9, all Advances, any accrued interest thereon and any other amounts
outstanding hereunder shall become immediately due and payable to the Liquidity
Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier and mailed or delivered or sent by
telecopier):
Borrower: Fleet National Bank
777 Main Street
Hartford, CT 06115
Attention: Corporate Trust
Administration
19
<PAGE> 23
Telecopy: (860) 986-7920
Liquidity
Provider: Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
or, as to each of the foregoing, at such other address as shall be designated
by such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Refunding Agreements at their respective addresses
set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.4 Further Assurances. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the
Liquidity Provider may reasonably require or deem advisable to carry into
effect the purposes of this Agreement and the other Operative Agreements or to
better assure and confirm unto the Liquidity Provider its rights, powers and
remedies hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Lease. In addition, the Borrower
agrees to indemnify, protect, defend and hold harmless the Liquidity Provider
from, against and in respect of, and shall pay on demand, all Expenses of any
kind or nature whatsoever, whether arising before, on or after the date hereof,
that may be imposed, incurred by or asserted against any Liquidity Indemnitee,
in any
20
<PAGE> 24
way relating to, resulting from, or arising out of or in connection with, this
Agreement, the Intercreditor Agreement or the Refunding Agreements; provided,
however, that the Borrower shall not be required to indemnify, protect, defend
and hold harmless any Liquidity Indemnitee in respect of any Expense of such
Liquidity Indemnitee (i) to the extent such Expense is attributable to the
gross negligence or willful misconduct of such Liquidity Indemnitee or any
Related Indemnitee, (ii) that is ordinary and usual operating overhead expense
or (iii) to the extent such Expense is attributable to the failure by such
Liquidity Indemnitee or its Related Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in any
Operative Agreement. The indemnities contained in such Sections 10 and 13 of
the Lease, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall
survive the termination of this Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither
the Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent or forged; or (iii) the making
of Advances by the Liquidity Provider against delivery of a Notice of Borrowing
and other documents which do not comply with the terms hereof; provided,
however, that the Borrower shall have a claim against the Liquidity Provider,
and the Liquidity Provider shall be liable to the Borrower, to the extent of
any damages suffered by the Borrower which were the result of (A) the Liquidity
Provider's willful misconduct or negligence in determining whether documents
presented hereunder comply with the terms hereof, or (B) any breach by the
Liquidity Provider of any of the terms of this Agreement, including, but not
limited to, the Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing strictly
complying with the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable or responsible in
any respect for (i) any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with this Agreement or any Notice of Borrowing delivered hereunder,
or (ii) any action, inaction or omission which may be taken by it in good
faith, absent willful misconduct or negligence (in which event the extent of
the Liquidity Provider's potential liability to the Borrower shall be limited
as set forth in the immediately preceding paragraph), in connection with this
Agreement or any Notice of Borrowing.
21
<PAGE> 25
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees to
pay, or cause to be paid (A) on the Effective Date and on such later date or
dates on which the Liquidity Provider shall make demand, all reasonable out-of-
pocket costs and expenses of the Liquidity Provider in connection with the
preparation, negotiation, execution, delivery, filing and recording of this
Agreement, any other Operative Agreement and any other documents which may be
delivered in connection with this Agreement, including, without limitation, the
reasonable fees and expenses of outside counsel for the Liquidity Provider and
(B) on demand, all reasonable costs and expenses of the Liquidity Provider
(including reasonable counsel fees and expenses) in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the
modification or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be delivered in
connection herewith or therewith (whether or not the same shall become
effective) or (iii) any action or proceeding relating to any order, injunction,
or other process or decree restraining or seeking to restrain the Liquidity
Provider from paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement 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 granting of participations 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,
22
<PAGE> 26
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 will be required to be withheld by the
Borrower or the Liquidity Provider with respect to any payments to be made to
such Participant in respect of this Agreement, (ii) furnish to the Liquidity
Provider and the Borrower either (x) a statement that it is incorporated under
the laws of the United States or a state thereof or (y) if it is not so
incorporated, two copies of a properly completed United States Internal Revenue
Service Form 4224 or Form 1001, as appropriate, or other applicable form,
certificate or document prescribed by the Internal Revenue Service certifying,
in each case, such Participant's entitlement to a complete exemption from
United States federal withholding tax in respect to any and all payments to be
made hereunder, and (iii) agree (for the benefit of the Liquidity Provider and
the Borrower) to provide the Liquidity Provider and the Borrower a new Form
4224 or Form 1001, as appropriate, (A) on or before the date that any such form
expires or becomes obsolete or (B) after the occurrence of any event requiring
a change in the most recent form previously delivered by it and prior to the
immediately following due date of any payment by the Borrower hereunder,
certifying in the case of a Form 1001 or Form 4224 that such Participant is
entitled to a complete exemption from United States federal withholding tax on
payments under this Agreement. Unless the Borrower has received forms or other
documents reasonably satisfactory to it indicating that payments hereunder are
not subject to United States federal withholding tax, the Borrower will
withhold taxes as required by law from such payments at the applicable
statutory rate without any obligation to gross-up or indemnify pursuant to
Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8,
the Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
23
<PAGE> 27
Reserve Bank, provided that any payment in respect of such assigned Advances
made by the Borrower to the Liquidity Provider in accordance with the terms of
this Agreement shall satisfy the Borrower's obligations hereunder in respect of
such assigned Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement which
is prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in respect
hereof or thereof, to the nonexclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and the appellate courts
from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of process
in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to each party hereto at its address set
forth in Section 7.2, or at such other address of which the Liquidity
Provider shall have been notified pursuant thereto; and
24
<PAGE> 28
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
Section 7.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other Operative
Agreements constitute the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof and supersede all prior understandings
and agreements of such parties.
Section 7.14 Headings; Section References. Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose. Unless the
context otherwise requires or otherwise indicated herein, all Section
references in this Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
FLEET NATIONAL BANK, not in
its individual capacity but
solely as Subordination Agent, as
agent and trustee for the
Class A Trust, 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 June
__, 1997, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for
the payment of interest on the Class A Certificates which was payable on
the Distribution Date falling on _____________ in accordance with the
terms and provisions of the Class A Trust Agreement and the Class A
Certificates and has not been paid pursuant to clause fourth of Section
3.2 of the Intercreditor Agreement or clause sixth of Section 3.3 of the
Intercreditor Agreement, which Advance is requested to be made on
_____________.
(3) The amount of the Interest Advance requested hereby (i) is
$__________, to be applied in respect of the payment of interest which
was due and payable on the Class A Certificates on such Distribution
Date, (ii) does not include any amount with respect to the payment of
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 or the Class D 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 applied shall be commingled with other funds held by the Borrower.
<PAGE> 31
(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 agent and
trustee for the Class A Trust, 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
June __, 1997, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the
downgrading of the debt rating of the Liquidity Provider issued by
either Rating Agency below the applicable Threshold Rating, which
Advance is requested to be made on ___________.
(3) The amount of the Downgrade Advance requested hereby (i) is
$___________, which equals the Available Commitment on the date hereof
and is to be applied in respect of the funding of the Class A Cash
Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class A
Certificates, or principal of, or interest or premium on, the Class B
Certificates, the Class C Certificates or the Class D 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 agent and
trustee for the Class A Trust, 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 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 June __, 1997, 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 agent and
trustee for the Class A Trust, as
Borrower
By
---------------------------------------
Name:
Title:
<PAGE> 37
Annex IV 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 agent and
trustee for the Class A Trust, as
Borrower
By
---------------------------------------
Name:
Title:
<PAGE> 1
Exhibit 4.11
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
Dated as of June __, 1997
between
FLEET NATIONAL BANK,
as Subordination Agent,
as agent and trustee for the
America West Airlines Pass Through Trust 1997-1B,
as Borrower
and
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Liquidity Provider
Relating to
America West Airlines Pass Through Trust 1997-1B
[_._]% America West Airlines Pass Through Certificates,
Series 1997-1B
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TABLE OF CONTENTS
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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Payments to the Liquidity Provider Under the Intercreditor Agreement . . . . . . . . . . . . . 9
Section 2.8 Book Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.9 Payments from Available Funds Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
OBLIGATIONS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . 10
Section 3.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.2 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3 Payments Free of Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.6 Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.7 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.8 Replacement of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.9 Funding Loss Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.10 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1 . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Conditions Precedent to Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.1 Affirmative Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.2 Negative Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
FINAL ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.1 Final Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.5 Indemnification; Survival of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.6 Liability of the Liquidity Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.7 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.8 Binding Effect; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.12 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.13 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.14 Headings; Section References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . 25
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Annex I - Interest Advance Notice of Borrowing
Annex II - Downgrade Advance Notice of Borrowing
Annex III - Notice of Automatic Reduction of Commitment
Annex IV - Notice of Replacement Borrower
ii
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IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS B CERTIFICATES
dated as of June __, 1997 between FLEET NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement (each as defined below), as agent and trustee
for the Class B Trust (as defined below) (the "Borrower"), and KREDIETBANK,
N.V., acting through its New York Branch (the "Liquidity Provider").
W I T N E S S E T H
WHEREAS, pursuant to the Class B Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.1), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class B Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As
used in this Agreement and unless otherwise expressly indicated, or unless the
context clearly requires otherwise, the following capitalized terms shall have
the following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance or a
Downgrade Advance, as the case may be.
"Applicable Liquidity Rate" means the rates of interest
specified in Section 3.7 with respect to any Advance.
"Applicable Margin" means (x) with respect to any Downgrade
Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per
annum and (y) with respect to any other Advance including an Applied Downgrade
Advance 1.5% (150 basis points) per annum.
"Applied Downgrade Advance" means any amount in respect of a
Downgrade Advance withdrawn from the Class B Cash Collateral Account for the
purpose of paying interest on the Class B
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Certificates in accordance with Section 3.6(f) of the 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(e) 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 as of 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 as 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 Dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London
interbank market at approximately 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in the principal amount of the
Advance to which such Interest Period is to apply and for a period of time
comparable to such Interest Period, as quoted by the Liquidity Provider to the
Subordination Agent.
"Liquidity Event of Default" means the occurrence of the
following: all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity. A Liquidity Event of Default shall
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not occur upon an automatic acceleration of the Equipment Notes as a result of
an America West Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
each affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"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- _____) 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.
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class B Certificates, that would be payable on the Class
B Certificates on each of the three successive semiannual Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two semiannual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class B
Certificates on such day and without regard to expected future payments of
principal on the Class B Certificates.
"Termination Date" means the earliest to occur of the
following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to
the Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of
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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", "Closing Date", "Controlling
Party", "Distribution Date", "Dollars or $", "Equipment Notes",
"Indenture", "Investment Earnings", "Lease", "Liquidity Facility",
"Moody's", "Operative Agreements", "Performing Equipment Note",
"Performing Note Deficiency", "Person", "Pool Balance", "Rating
Agency", "Refunding Agreement", "Regular Distribution Date",
"Replacement Liquidity Facility", "Responsible Officer", "Scheduled
Payment", "Special Payment", "Standard & Poor's", "Stated Interest
Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Triggering
Event", "Trust", "Trust Agreements", "Trustee", "Underwriters",
"Underwriting Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby
irrevocably agrees, on the terms and conditions hereinafter set forth, to make
Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until 12:00 Noon (New York City time) on the
Expiry Date (unless the obligations of the Liquidity Provider shall be earlier
terminated in accordance with the terms of Section
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<PAGE> 9
2.4(b)) in an aggregate amount at any time outstanding not to exceed the
Commitment.
Section 2.2 Making the Advances. (a) Interest Advances
shall be made in one or more Borrowings by delivery to the Liquidity Provider
of one or more written and completed Notices of Borrowing in substantially the
form of Annex I attached hereto, signed by a Responsible Officer of the
Borrower, in an amount not exceeding the Available Commitment at such time and
shall be used solely for the payment when due of interest on the Class B
Certificates at the Stated Interest Rate therefor in accordance with Section
3.6(a) of the Intercreditor Agreement. Each Interest Advance made hereunder
shall automatically reduce the Available Commitment and the amount available to
be borrowed hereunder by subsequent Advances by the amount of such Interest
Advance (subject to reinstatement as provided in the next sentence). Upon
repayment to the Liquidity Provider in full of the amount of any Interest
Advance made pursuant to this Section 2.2(a), together with accrued interest
thereon (as provided herein), the Available Commitment shall be reinstated by
the amount of such repaid Interest Advance; provided, however, that the
Available Commitment shall not be so reinstated at any time if (x) both (i) a
Triggering Event shall have occurred and be continuing and (ii) a Performing
Note Deficiency exists or (y) a Liquidity Event of Default shall have occurred
and be continuing.
(b) A Downgrade Advance shall be made in a single Borrowing
upon a downgrading of the rating of the Liquidity Provider resulting in the
Liquidity Provider's ratings not meeting the Threshold Rating (as provided for
in Section 3.6(c) of the Intercreditor Agreement) unless a Replacement
Liquidity Facility shall have been delivered to the Borrower in accordance with
said Section 3.6(c), by delivery to the Liquidity Provider of a written and
completed Notice of Borrowing in substantially the form of Annex II attached
hereto, signed by a Responsible Officer of the Borrower, in an amount not
exceeding the Available Commitment at such time, and shall be used to fund the
Class B Cash Collateral Account in accordance with said Section 3.6(c). The
Liquidity Provider shall promptly notify the Borrower of any downgrade of its
unsecured debt rating by Moody's or Standard & Poor's below the applicable
Threshold Rating.
(c) A Final Advance shall be made by the Liquidity Provider
without the necessity for a Notice of Borrowing at the option of the Liquidity
Provider on the occurrence of an event described in Section 6.1(a) or 6.1(b) in
an amount equal to the Available Commitment at such time, and shall be used to
fund the Class B Cash Collateral Account.
(d) Each Borrowing (other than under Section 2.2(c)) shall be
made on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.2(a) or 2.2(b), as
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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 proposed 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
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 0.35% of the Commitment (as in effect on the
Effective Date). Such fee shall be payable on the Effective Date.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.40% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance is made and the
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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 III hereto) to the Liquidity
Provider (with a copy to America West) within two Business Days thereof. The
failure by the Borrower to furnish any such notice shall not affect such
automatic reduction of the Commitment.
(b) Termination. Upon the making of any Downgrade Advance or
Final Advance hereunder or the occurrence of the Termination Date, the
obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled
to request any further Borrowing hereunder.
Section 2.5 Repayments of Interest Advances or the Final
Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay,
or to cause to be paid, to the Liquidity Provider on each date on which the
Liquidity Provider shall make an Interest Advance or the Final Advance, an
amount equal to (a) the amount of such Interest Advance or the Final Advance
(any such Interest Advance or the Final Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and
2.9, unless otherwise waived by the Liquidity Provider, the Borrower shall be
obligated, without notice of an Advance or demand for repayment from the
Liquidity Provider (which notice and demand are hereby waived by the Borrower),
to repay the Liquidity Provider for all Interest Advances and Final Advances on
the same day as made and all Applied Downgrade Advances on the same day they
become Applied Downgrade Advances. The Borrower and the Liquidity Provider
agree that the repayment in full of each Interest Advance and the Final Advance
on the date such Interest Advance or the Final Advance is made and each Applied
Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower
by the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances. (a) Amounts
advanced hereunder in respect of a Downgrade Advance
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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.
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
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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) or to reduce the amount of any sum
received or receivable by the Liquidity Provider under this Agreement with
respect thereto, then, no later than 30 days after demand by the Liquidity
Provider, the Borrower shall pay, or cause to be paid, to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
increased cost or reduction. A certificate as to such increased cost or
reduction incurred by the Liquidity Provider as a result of any event mentioned
in clause (i), (ii) or (iii) above, prepared in
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reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section
3.1 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider
shall determine that the adoption after the date hereof of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change after the date hereof in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance after the date hereof
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, is generally applicable to all
banks domiciled in Belgium with branches in the United States and not related
to the financial condition of the Liquidity Provider and has the effect of
reducing the rate of return on the Liquidity Provider's capital as a
consequence of issuing or maintaining its commitment hereunder or its funding
or maintaining Advances to a level below that which the Liquidity Provider
could have achieved but for such adoption, change or compliance (taking into
consideration the Liquidity Provider's policies with respect to capital
adequacy) by an amount deemed by the Liquidity Provider to be material, then,
no later than 30 days after demand by the Liquidity Provider, the Borrower
shall pay to the Liquidity Provider, from time to time as specified by the
Liquidity Provider, additional amounts which shall be sufficient to compensate
the Liquidity Provider for such reduction in respect of issuing or maintaining
its commitment hereunder or its funding or maintaining Advances. A certificate
as to such additional amount describing the event which has the effect of
reducing the rate of return on the Liquidity Provider's capital, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider 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
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Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider further agrees that no amounts shall be
payable under this Section 3.2 unless the Liquidity Provider is charging its
other borrowers with whom it has agreements similar to this agreement the
amounts that are payable to the Liquidity Provider under this Section 3.2.
Section 3.3 Payments Free of Deductions. All payments made
by the Borrower under this Agreement shall be made free and clear of, and
without reduction for or on account of, any present or future stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
restrictions or conditions of any nature whatsoever now or hereafter imposed,
levied, collected, withheld or assessed, excluding any Taxes imposed on the
overall net income of the Liquidity Provider and excluding United States
federal income tax withholding to the extent such withholding is, or would be,
actually imposed upon payments to the Liquidity Provider as of the date of this
Agreement (such non- excluded taxes being referred to herein, collectively, as
"Non-Excluded Taxes" and, individually, as a "Non-Excluded Tax"). If any
Non-Excluded Taxes are required to be withheld from any amounts payable to the
Liquidity Provider under this Agreement, the amounts so payable to the
Liquidity Provider shall be increased to the extent necessary to yield to the
Liquidity Provider (after payment of all Non-Excluded Taxes and taxes imposed
on the receipt of such increase) interest or any other such amounts payable
under this Agreement at the rates or in the amounts specified in this
Agreement. Whenever any Non-Excluded Tax is payable by the Borrower, promptly
thereafter the Borrower shall send the Liquidity Provider certified copies of
tax receipts evidencing such payment by the Borrower. The Liquidity Provider
agrees to provide to the Borrower on or prior to the Effective Date, and from
time to time thereafter prior to the expiration of the effectiveness of and
promptly upon the occurrence of any event requiring a change in the most recent
form previously delivered by it (and prior to the immediately following due
date of any payment by the Borrower hereunder), to the extent that the
Liquidity Provider is legally entitled to do so, two original Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that the Liquidity
Provider is completely exempt from United States withholding tax on payments
pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section
3.3 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
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Section 3.4 Payments. The Borrower shall make or cause to be
made each payment to the Liquidity Provider under this Agreement so as to cause
the same to be received by the Liquidity Provider not later than 1:00 P.M.
(New York City time) on the day when due. The Borrower shall make all such
payments in lawful money of the United States of America, to the Liquidity
Provider in immediately available funds, by wire transfer to The Bank of New
York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account
of Kredietbank New York, Account No. [802- 3015618] (referencing America West
Airlines 1997-1B 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
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payable pursuant to this Section 3.7 below the maximum rate permitted by
applicable law until the total amount of interest accrued equals the amount of
interest that would have accrued if such otherwise applicable interest rate as
set forth in this Section 3.7 had at all times been in effect. Nothing
contained in this Section 3.7 shall require the Borrower to pay any amount
under this Section 3.7 other than to the extent the Borrower shall have funds
available therefor.
(b) Each Advance will be either a Base Rate Advance or a
LIBOR Advance as provided in this Section. Each such Advance will be a Base
Rate Advance for the period from the date of its borrowing to (but excluding)
the third Business Day following the Liquidity Provider's receipt of the Notice
of Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR
Advance; provided that the Final Advance shall, until repaid in full, be a Base
Rate Advance and the Borrower may not convert the Final Advance into a LIBOR
Advance.
(c) Each Base Rate Advance shall bear interest at a per annum
rate equal to the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date and, in the event
of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of
interest accrued on the amount of principal repaid).
(d) Each LIBOR Advance shall bear interest during each
Interest Period at a per annum rate equal to the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on
the last day of such Interest Period and, in the event of the payment of
principal of such LIBOR Advance on a day other than such last day, on the date
of such payment (to the extent of interest accrued on the amount of principal
repaid).
(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 IV 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.
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Section 3.9 Funding Loss Indemnification. The Borrower shall
pay to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider) to compensate it for any loss, cost, or expense incurred as
a result of:
(a) Any payment or prepayment of a LIBOR Advance on a date
other than the last day of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow a LIBOR Advance on
the date for borrowing specified in the relevant notice under Section
2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision
in this Agreement, if any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of
the Liquidity Provider, requires immediate repayment; or (b) at the expiration
of the last Interest Period to expire before the effective date of any such
change or request. In the event any change of the nature described in the
preceding sentence shall make it unlawful or impossible for the Liquidity
Provider (or its Lending Office) to maintain or fund its Base Rate Advances,
the Liquidity Provider shall have the right to cause a Replacement Liquidity
Facility to be substituted for this Agreement, subject to (i) the satisfaction
of the conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to America West.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section
2.1. Section 2.1 of this Agreement shall become effective on and as of the
first date (the "Effective Date") on which the following conditions precedent
have been satisfied or waived:
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(a) The Liquidity Provider shall have received on or before
the Closing Date each of the following, each dated such date (except
for those documents delivered pursuant to paragraphs (v) and (vii) of
this Section 4.1(a)), and each in form and substance satisfactory to
the Liquidity Provider:
(i) This Agreement duly executed on behalf of
the Borrower;
(ii) The Intercreditor Agreement duly executed
on behalf of each of the parties thereto;
(iii) Counterparts (or certified copies thereof)
of each of the Operative Agreements (other than this Agreement
and the Intercreditor Agreement) which, when taken together,
bear the signatures of all of the respective parties thereto
and which are in full force and effect in accordance with
their respective terms;
(iv) A copy of the Prospectus and specimen
copies of the Class B Certificates;
(v) Evidence that, on the Effective Date, the
Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates will receive
long-term credit ratings from Moody's of not lower than A2,
Baa2, Ba1 and Ba3, respectively, and from Standard & Poor's of
not lower than AA-, A-, BBB- and BB, respectively;
(vi) An executed or a 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,
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remedies, powers, privileges, liens and security interests of,
or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements;
(viii) Copies of the appraisals included in the
Prospectus;
(ix) A letter from America West agreeing to
provide to the Liquidity Provider the periodic financial
reports referred to in Section 8.04(a) of the Trust
Agreements; and
(x) Such other documents, instruments,
opinions and approvals (and, if requested by the Liquidity
Provider, certified duplicates or executed copies thereof) as
the Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true and shall be
deemed to have been represented by each party (other than clause (ii)
below, which shall be deemed to have been represented only by America
West) to the Refunding Agreements as being true on and as of the
Effective Date:
(i) The representations and warranties of such
Person contained in each Refunding Agreement are true and
correct on and as of the Effective Date as though made on and
as of the Effective Date; and
(ii) No event has occurred and is continuing,
or would result from the entering into of this Agreement or
the making of any Advance, which constitutes a Liquidity Event
of Default.
(c) 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.
(d) 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).
(e) The Borrower shall have received a certificate, dated the
date hereof, signed by a duly authorized
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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(e)).
Section 4.2 Conditions Precedent to Borrowing. The
obligation of the Liquidity Provider to make an Advance on the occasion of each
Borrowing shall be subject to the conditions precedent that the Effective Date
shall have occurred and, except in the case of a Final Advance, prior to the
date of such Borrowing, the Borrower shall have delivered a Notice of Borrowing
which conforms to the terms and conditions of this Agreement and has been
completed as may be required by the relevant form of the Notice of Borrowing
for the type of Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long
as any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any
amount to the Liquidity Provider hereunder, the Borrower will, unless the
Liquidity Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay
or cause to be paid all amounts payable by it under this Agreement and
the other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity
Provider with reasonable promptness, such information and data with
respect to the transactions contemplated by the Operative Agreements
as from time to time may be reasonably requested by the Liquidity
Provider; and permit the Liquidity Provider, upon reasonable notice,
to inspect the Borrower's books and records with respect to such
transactions and to meet with officers and employees of the Borrower
to discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as
any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any
amount to the Liquidity Provider hereunder, the Borrower will not, without the
written consent of the Liquidity Provider:
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(a) Amendments. Modify, amend or supplement, or give any
consent to any modification, amendment, or supplement, or make any
waiver with respect to, any provision of the Trust Agreements or the
Intercreditor Agreement, except for any supplemental agreement to the
Trust Agreements provided for in Section 9.01 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed
any successor Borrower without the prior written approval of the
Liquidity Provider (which approval shall not be unreasonably
withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a) both (i) a Triggering
Event shall have occurred and be continuing and (ii) a Performing Note
Deficiency exists or (b) a Liquidity Event of Default shall have occurred and
be continuing, the Liquidity Provider may, in its discretion, make a Final
Advance whereupon (i) the Liquidity Provider shall have no further obligation
to make Advances hereunder, (ii) all other outstanding Advances shall be
automatically converted into Final Advances for purposes of determining the
Applicable Liquidity Rate for interest payable thereon, and (iii) subject to
Sections 2.7 and 2.9, all Advances, any accrued interest thereon and any other
amounts outstanding hereunder shall become immediately due and payable to the
Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier and mailed or delivered or sent by
telecopier):
Borrower: Fleet National Bank
777 Main Street
Hartford, CT 06115
Attention: Corporate Trust
Administration
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Telecopy: (860) 986-7920
Liquidity
Provider: Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
or, as to each of the foregoing, at such other address as shall be designated
by such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Refunding Agreements at their respective addresses
set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of
the Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.4 Further Assurances. The Borrower agrees to do
such further acts and things and to execute and deliver to the Liquidity
Provider such additional assignments, agreements, powers and instruments as the
Liquidity Provider may reasonably require or deem advisable to carry into
effect the purposes of this Agreement and the other Operative Agreements or to
better assure and confirm unto the Liquidity Provider its rights, powers and
remedies hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Lease. In addition, the Borrower
agrees to indemnify, protect, defend and hold harmless the Liquidity Provider
from, against and in respect of, and shall pay on demand, all Expenses of any
kind or nature whatsoever, whether arising before, on or after the date hereof,
that may be imposed, incurred by or asserted against any Liquidity Indemnitee,
in any
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way relating to, resulting from, or arising out of or in connection with, this
Agreement, the Intercreditor Agreement or the Refunding Agreements; provided,
however, that the Borrower shall not be required to indemnify, protect, defend
and hold harmless any Liquidity Indemnitee in respect of any Expense of such
Liquidity Indemnitee (i) to the extent such Expense is attributable to the
gross negligence or willful misconduct of such Liquidity Indemnitee or any
Related Indemnitee, (ii) that is ordinary and usual operating overhead expense
or (iii) to the extent such Expense is attributable to the failure by such
Liquidity Indemnitee or its Related Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in any
Operative Agreement. The indemnities contained in such Sections 10 and 13 of
the Lease, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall
survive the termination of this Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither
the Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent or forged; or (iii) the making
of Advances by the Liquidity Provider against delivery of a Notice of Borrowing
and other documents which do not comply with the terms hereof; provided,
however, that the Borrower shall have a claim against the Liquidity Provider,
and the Liquidity Provider shall be liable to the Borrower, to the extent of
any damages suffered by the Borrower which were the result of (A) the Liquidity
Provider's willful misconduct or negligence in determining whether documents
presented hereunder comply with the terms hereof, or (B) any breach by the
Liquidity Provider of any of the terms of this Agreement, including, but not
limited to, the Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing strictly
complying with the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable or responsible
in any respect for (i) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with this Agreement or any Notice of Borrowing
delivered hereunder, or (ii) any action, inaction or omission which may be
taken by it in good faith, absent willful misconduct or negligence (in which
event the extent of the Liquidity Provider's potential liability to the
Borrower shall be limited as set forth in the immediately preceding paragraph),
in connection with this Agreement or any Notice of Borrowing.
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Section 7.7 Costs, Expenses and Taxes. The Borrower agrees
to pay, or cause to be paid (A) on the Effective Date and on such later date or
dates on which the Liquidity Provider shall make demand, all reasonable out-of-
pocket costs and expenses of the Liquidity Provider in connection with the
preparation, negotiation, execution, delivery, filing and recording of this
Agreement, any other Operative Agreement and any other documents which may be
delivered in connection with this Agreement, including, without limitation, the
reasonable fees and expenses of outside counsel for the Liquidity Provider and
(B) on demand, all reasonable costs and expenses of the Liquidity Provider
(including reasonable counsel fees and expenses) in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the
modification or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be delivered in
connection herewith or therewith (whether or not the same shall become
effective) or (iii) any action or proceeding relating to any order, injunction,
or other process or decree restraining or seeking to restrain the Liquidity
Provider from paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement 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 granting of participations 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,
22
<PAGE> 26
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 will be required to be
withheld by the Borrower or the Liquidity Provider with respect to any payments
to be made to such Participant in respect of this Agreement, (ii) furnish to
the Liquidity Provider and the Borrower either (x) a statement that it is
incorporated under the laws of the United States or a state thereof or (y) if
it is not so incorporated, two copies of a properly completed United States
Internal Revenue Service Form 4224 or Form 1001, as appropriate, or other
applicable form, certificate or document prescribed by the Internal Revenue
Service certifying, in each case, such Participant's entitlement to a complete
exemption from United States federal withholding tax in respect to any and all
payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the
date that any such form expires or becomes obsolete or (B) after the occurrence
of any event requiring a change in the most recent form previously delivered by
it and prior to the immediately following due date of any payment by the
Borrower hereunder, certifying in the case of a Form 1001 or Form 4224 that
such Participant is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it indicating that
payments hereunder are not subject to United States federal withholding tax,
the Borrower will withhold taxes as required by law from such payments at the
applicable statutory rate without any obligation to gross-up or indemnify
pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8,
the Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
23
<PAGE> 27
Reserve Bank, provided that any payment in respect of such assigned Advances
made by the Borrower to the Liquidity Provider in accordance with the terms of
this Agreement shall satisfy the Borrower's obligations hereunder in respect of
such assigned Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury
Trial.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction of
the courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and the appellate
courts from any thereof;
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of
process in any such action or proceeding may be effected by mailing a
copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to each party hereto at its
address set forth in Section 7.2, or at such other address of which
the Liquidity Provider shall have been notified pursuant thereto; and
24
<PAGE> 28
(iv ) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
Section 7.12 Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other
Operative Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior
understandings and agreements of such parties.
Section 7.14 Headings; Section References. Section headings
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose. Unless
the context otherwise requires or otherwise indicated herein, all Section
references in this Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF
THE LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
25
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first set forth above.
FLEET NATIONAL BANK, not in
its individual capacity but
solely as Subordination Agent,
as agent and trustee for the
Class B Trust, 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
June __, 1997, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of an Interest Advance by the Liquidity Provider to be used
for the payment of interest on the Class B Certificates which was
payable on the Distribution Date falling on _____________ in
accordance with the terms and provisions of the Class B Trust
Agreement and the Class B Certificates and has not been paid pursuant
to clause fifth of Section 3.2 of the Intercreditor Agreement or
clause seventh of Section 3.3 of the Intercreditor Agreement, which
Advance is requested to be made on _____________.
(3) The amount of the Interest Advance requested hereby (i)
is $___________, to be applied in respect of the payment of interest
which was due and payable on the Class B Certificates on such
Distribution Date, (ii) does not include any amount with respect to
the payment of 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 or the Class D 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 applied shall be commingled with other funds held
by the Borrower.
<PAGE> 31
(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 agent and
trustee for the Class B Trust,
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 June __, 1997, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and
not otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of the Downgrade Advance by the Liquidity Provider to be
used for the funding of the Class B Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by
reason of the downgrading of the debt rating of the Liquidity Provider
issued by either Rating Agency below the applicable Threshold Rating,
which Advance is requested to be made on __________.
(3) The amount of the Downgrade Advance requested hereby (i)
is $___________, which equals the Available Commitment on the date
hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class B
Certificates, or principal of, or interest or premium on, the Class A
Certificates, the Class C Certificates or the Class D 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 agent and trustee for the
Class B Trust, 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 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 June __,
1997, 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 agent and trustee for the
Class B Trust, as Borrower
By
---------------------------------
Name:
Title:
<PAGE> 37
Annex IV 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 agent and trustee for the
Class B Trust, as Borrower
By
-----------------------------------
Name:
Title:
<PAGE> 1
Exhibit 4.12
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
Dated as of June __, 1997
between
FLEET NATIONAL BANK,
as Subordination Agent,
as agent and trustee for the
America West Airlines Pass Through Trust 1997-1C,
as Borrower
and
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Liquidity Provider
Relating to
America West Airlines Pass Through Trust 1997-1C
[_._]% America West Airlines Pass Through Certificates,
Series 1997-1C
<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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Payments to the Liquidity Provider Under
the Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.8 Book Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.9 Payments from Available Funds Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
OBLIGATIONS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . 10
Section 3.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.2 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3 Payments Free of Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.6 Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.7 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.8 Replacement of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.9 Funding Loss Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.10 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Conditions Precedent to Effectiveness of
Section 2.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Conditions Precedent to Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.1 Affirmative Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.2 Negative Covenants of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
FINAL ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.1 Final Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.2 Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.5 Indemnification; Survival of Certain
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.6 Liability of the Liquidity Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.7 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.8 Binding Effect; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.11 Submission to Jurisdiction; Waiver of
Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.12 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.13 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.14 Headings; Section References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
Annex I - Interest Advance Notice of Borrowing
Annex II - Downgrade Advance Notice of Borrowing
Annex III - Notice of Automatic Reduction of Commitment
Annex IV - Notice of Replacement Borrower
ii
<PAGE> 4
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS C CERTIFICATES
dated as of June __, 1997 between FLEET NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement (each as defined below), as agent and trustee
for the Class C Trust (as defined below) (the "Borrower"), and KREDIETBANK,
N.V., acting through its New York Branch (the "Liquidity Provider").
W I T N E S S E T H
WHEREAS, pursuant to the Class C Trust Agreement (such term
and all other capitalized terms used in these recitals having the meanings set
forth or referred to in Section 1.1), the Class C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment
of a portion of the interest on the Class C Certificates in accordance with
their terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. (a) Definitions. As
used in this Agreement and unless otherwise expressly indicated, or unless the
context clearly requires otherwise, the following capitalized terms shall have
the following respective meanings for all purposes of this Agreement:
"Advance" means an Interest Advance, a Final Advance or a
Downgrade Advance, as the case may be.
"Applicable Liquidity Rate" means the rates of interest
specified in Section 3.7 with respect to any Advance.
"Applicable Margin" means (x) with respect to any Downgrade
Advance (other than an Applied Downgrade Advance) .40% (40 basis points) per
annum and (y) with respect to any other Advance including an Applied Downgrade
Advance 1.5% (150 basis points) per annum.
"Applied Downgrade Advance" means any amount in respect of a
Downgrade Advance withdrawn from the Class C Cash Collateral Account for the
purpose of paying interest on the Class C
<PAGE> 5
Certificates in accordance with Section 3.6(f) of the Intercreditor Agreement.
"Available Commitment" means, at any time of determination, an
amount equal to (i) the Commitment at such time less (ii) subject to the
proviso contained in the third sentence of Section 2.2(a), the aggregate amount
of each Advance outstanding at such time; provided that following a Downgrade
Advance or a Final Advance, the Available Commitment shall be zero.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the higher of (i) the base commercial lending rate announced from time to time
by the Liquidity Provider, or (ii) the rate quoted by the Liquidity Provider,
at approximately 11:00 A.M., New York City time, to dealers in the New York
Federal funds market for overnight offering of dollars by the Liquidity
Provider, for deposit plus .50 of 1 percent (.50%).
"Base Rate Advance" means an Advance that bears interest at a
rate based upon the Base Rate.
"Borrower" has the meaning assigned to such term in the
recital of parties to this Agreement.
"Borrowing" means the making of Advances requested by delivery
of a Notice of Borrowing or pursuant to Section 6.1.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in New
York, New York or Hartford, Connecticut, and, if the applicable Business Day
relates to any Advance or other amount bearing interest based on the LIBOR
Rate, on which dealings are carried on in the London interbank market.
"Commitment" means, initially, [$__,___,___] 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(e) 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 as of 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 as 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 Dollars are offered for the relevant
Interest Period by the Liquidity Provider to prime banks in the London
interbank market at approximately 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in the principal amount of the
Advance to which such Interest Period is to apply and for a period of time
comparable to such Interest Period, as quoted by the Liquidity Provider to the
Subordination Agent.
"Liquidity Event of Default" means the occurrence of the
following: all of the Equipment Notes shall have been either declared to be
immediately due and payable or shall not have been paid at their final
maturity. A Liquidity Event of Default shall
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not occur upon an automatic acceleration of the Equipment Notes as a result of
an America West Bankruptcy Event.
"Liquidity Indemnitee" means (i) the Liquidity Provider, (ii)
each affiliate of the Liquidity Provider, (iii) the respective directors,
officers, employees, agents and servants of the Liquidity Provider and its
affiliates, and (iv) the successors and permitted assigns of the persons
described in clauses (i) through (iii), inclusive.
"Liquidity Provider" has the meaning assigned to such term in
the recital of parties to this Agreement.
"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- _____) 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.
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class C Certificates, that would be payable on the Class
C Certificates on each of the three successive semiannual Regular Distribution
Dates immediately following such day or, if such day is a Regular Distribution
Date, on such day and the succeeding two semiannual Regular Distribution Dates,
in each case calculated on the basis of the Pool Balance of the Class C
Certificates on such day and without regard to expected future payments of
principal on the Class C Certificates.
"Termination Date" means the earliest to occur of the
following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to
the Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of
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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", "Closing Date", "Controlling Party",
"Distribution Date", "Dollars or $", "Equipment Notes", "Indenture",
"Investment Earnings", "Lease", "Liquidity Facility", "Moody's",
"Operative Agreements", "Performing Equipment Note", "Performing Note
Deficiency", "Person", "Pool Balance", "Rating Agency", "Refunding
Agreement", "Regular Distribution Date", "Replacement Liquidity
Facility", "Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate", "Subordination
Agent", "Taxes", "Threshold Rating", "Triggering Event", "Trust",
"Trust Agreements", "Trustee", "Underwriters", "Underwriting
Agreement", and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby
irrevocably agrees, on the terms and conditions hereinafter set forth, to make
Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until 12:00 Noon (New York City time) on the
Expiry Date (unless the obligations of the Liquidity Provider shall be earlier
terminated in accordance with the terms of Section
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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.
(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
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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 proposed 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
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 0.35% of the Commitment (as in effect on the
Effective Date). Such fee shall be payable on the Effective Date.
(b) The Borrower shall pay, or shall cause to be paid, to the
Liquidity Provider, a fee equal to 0.40% per annum on the average Available
Commitment from the Effective Date to the earlier of the date on which a
Downgrade Advance is made and the
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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 III hereto) to the Liquidity
Provider (with a copy to America West) within two Business Days thereof. The
failure by the Borrower to furnish any such notice shall not affect such
automatic reduction of the Commitment.
(b) Termination. Upon the making of any Downgrade Advance or
Final Advance hereunder or the occurrence of the Termination Date, the
obligation of the Liquidity Provider to make further Advances hereunder shall
automatically and irrevocably terminate, and the Borrower shall not be entitled
to request any further Borrowing hereunder.
Section 2.5 Repayments of Interest Advances or the Final
Advance. Subject to Sections 2.7 and 2.9, the Borrower hereby agrees to pay,
or to cause to be paid, to the Liquidity Provider on each date on which the
Liquidity Provider shall make an Interest Advance or the Final Advance, an
amount equal to (a) the amount of such Interest Advance or the Final Advance
(any such Interest Advance or the Final Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
Unpaid Advance as provided in Section 3.7. Subject to Sections 2.6, 2.7 and
2.9, unless otherwise waived by the Liquidity Provider, the Borrower shall be
obligated, without notice of an Advance or demand for repayment from the
Liquidity Provider (which notice and demand are hereby waived by the Borrower),
to repay the Liquidity Provider for all Interest Advances and Final Advances on
the same day as made and all Applied Downgrade Advances on the same day they
become Applied Downgrade Advances. The Borrower and the Liquidity Provider
agree that the repayment in full of each Interest Advance and the Final Advance
on the date such Interest Advance or the Final Advance is made and each Applied
Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower
by the Liquidity Provider.
Section 2.6 Repayments of Downgrade Advances. (a) Amounts
advanced hereunder in respect of a Downgrade Advance
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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.
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
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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) or to reduce the amount of any sum
received or receivable by the Liquidity Provider under this Agreement with
respect thereto, then, no later than 30 days after demand by the Liquidity
Provider, the Borrower shall pay, or cause to be paid, to the Liquidity
Provider, from time to time as specified by the Liquidity Provider, additional
amounts which shall be sufficient to compensate the Liquidity Provider for such
increased cost or reduction. A certificate as to such increased cost or
reduction incurred by the Liquidity Provider as a result of any event mentioned
in clause (i), (ii) or (iii) above, prepared in
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reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section
3.1 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
Section 3.2 Capital Adequacy. If the Liquidity Provider
shall determine that the adoption after the date hereof of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change after the date hereof in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance after the date hereof
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, is generally applicable to all
banks domiciled in Belgium with branches in the United States and not related
to the financial condition of the Liquidity Provider and has the effect of
reducing the rate of return on the Liquidity Provider's capital as a
consequence of issuing or maintaining its commitment hereunder or its funding
or maintaining Advances to a level below that which the Liquidity Provider
could have achieved but for such adoption, change or compliance (taking into
consideration the Liquidity Provider's policies with respect to capital
adequacy) by an amount deemed by the Liquidity Provider to be material, then,
no later than 30 days after demand by the Liquidity Provider, the Borrower
shall pay to the Liquidity Provider, from time to time as specified by the
Liquidity Provider, additional amounts which shall be sufficient to compensate
the Liquidity Provider for such reduction in respect of issuing or maintaining
its commitment hereunder or its funding or maintaining Advances. A certificate
as to such additional amount describing the event which has the effect of
reducing the rate of return on the Liquidity Provider's capital, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower,
shall be conclusive, absent manifest error, as to the amount thereof.
The Liquidity Provider 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
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Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider further agrees that no amounts shall be
payable under this Section 3.2 unless the Liquidity Provider is charging its
other borrowers with whom it has agreements similar to this agreement the
amounts that are payable to the Liquidity Provider under this Section 3.2.
Section 3.3 Payments Free of Deductions. All payments made
by the Borrower under this Agreement shall be made free and clear of, and
without reduction for or on account of, any present or future stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, withholdings,
restrictions or conditions of any nature whatsoever now or hereafter imposed,
levied, collected, withheld or assessed, excluding any Taxes imposed on the
overall net income of the Liquidity Provider and excluding United States
federal income tax withholding to the extent such withholding is, or would be,
actually imposed upon payments to the Liquidity Provider as of the date of this
Agreement (such non-excluded taxes being referred to herein, collectively, as
"Non-Excluded Taxes" and, individually, as a "Non-Excluded Tax"). If any
Non-Excluded Taxes are required to be withheld from any amounts payable to the
Liquidity Provider under this Agreement, the amounts so payable to the
Liquidity Provider shall be increased to the extent necessary to yield to the
Liquidity Provider (after payment of all Non-Excluded Taxes and taxes imposed
on the receipt of such increase) interest or any other such amounts payable
under this Agreement at the rates or in the amounts specified in this
Agreement. Whenever any Non-Excluded Tax is payable by the Borrower, promptly
thereafter the Borrower shall send the Liquidity Provider certified copies of
tax receipts evidencing such payment by the Borrower. The Liquidity Provider
agrees to provide to the Borrower on or prior to the Effective Date, and from
time to time thereafter prior to the expiration of the effectiveness of and
promptly upon the occurrence of any event requiring a change in the most recent
form previously delivered by it (and prior to the immediately following due
date of any payment by the Borrower hereunder), to the extent that the
Liquidity Provider is legally entitled to do so, two original Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that the Liquidity
Provider is completely exempt from United States withholding tax on payments
pursuant to this Agreement.
The Liquidity Provider agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
change the jurisdiction of its Lending Office if making such change would avoid
the need for, or reduce the amount of, any amount payable under this Section
3.3 that may thereafter accrue and would not, in the reasonable judgment of the
Liquidity Provider, be otherwise disadvantageous in any material respect to the
Liquidity Provider.
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Section 3.4 Payments. The Borrower shall make or cause to be
made each payment to the Liquidity Provider under this Agreement so as to cause
the same to be received by the Liquidity Provider not later than 1:00 P.M.
(New York City time) on the day when due. The Borrower shall make all such
payments in lawful money of the United States of America, to the Liquidity
Provider in immediately available funds, by wire transfer to The Bank of New
York, One Wall Street, New York, NY 10286, ABA No. 021-000-018, for the account
of Kredietbank New York, Account No. [802-3015618] (referencing America West
Airlines 1997-1C 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
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payable pursuant to this Section 3.7 below the maximum rate permitted by
applicable law until the total amount of interest accrued equals the amount of
interest that would have accrued if such otherwise applicable interest rate as
set forth in this Section 3.7 had at all times been in effect. Nothing
contained in this Section 3.7 shall require the Borrower to pay any amount
under this Section 3.7 other than to the extent the Borrower shall have funds
available therefor.
(b) Each Advance will be either a Base Rate Advance or a
LIBOR Advance as provided in this Section. Each such Advance will be a Base
Rate Advance for the period from the date of its borrowing to (but excluding)
the third Business Day following the Liquidity Provider's receipt of the Notice
of Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR
Advance; provided that the Final Advance shall, until repaid in full, be a Base
Rate Advance and the Borrower may not convert the Final Advance into a LIBOR
Advance.
(c) Each Base Rate Advance shall bear interest at a per annum
rate equal to the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date and, in the event
of the payment of principal of such Base Rate Advance on a day other than a
Regular Distribution Date, on the date of such payment (to the extent of
interest accrued on the amount of principal repaid).
(d) Each LIBOR Advance shall bear interest during each
Interest Period at a per annum rate equal to the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on
the last day of such Interest Period and, in the event of the payment of
principal of such LIBOR Advance on a day other than such last day, on the date
of such payment (to the extent of interest accrued on the amount of principal
repaid).
(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 IV 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.
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<PAGE> 18
Section 3.9 Funding Loss Indemnification. The Borrower shall
pay to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider) to compensate it for any loss, cost, or expense incurred as
a result of:
(a) Any payment or prepayment of a LIBOR Advance on a date
other than the last day of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow a LIBOR Advance on
the date for borrowing specified in the relevant notice under Section
2.2 or 3.7.
Section 3.10 Illegality. Notwithstanding any other provision
in this Agreement, if any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of
the Liquidity Provider, requires immediate repayment; or (b) at the expiration
of the last Interest Period to expire before the effective date of any such
change or request. In the event any change of the nature described in the
preceding sentence shall make it unlawful or impossible for the Liquidity
Provider (or its Lending Office) to maintain or fund its Base Rate Advances,
the Liquidity Provider shall have the right to cause a Replacement Liquidity
Facility to be substituted for this Agreement, subject to (i) the satisfaction
of the conditions precedent to the effectiveness of, and the other provisions
regarding, a Replacement Liquidity Facility set forth in Section 3.6(e) of the
Intercreditor Agreement and (ii) such Replacement Liquidity Facility and
Replacement Liquidity Provider being reasonably acceptable to America West.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section
2.1. Section 2.1 of this Agreement shall become effective on and as of the
first date (the "Effective Date") on which the following conditions precedent
have been satisfied or waived:
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(a) The Liquidity Provider shall have received on or before
the Closing Date each of the following, each dated such date (except
for those documents delivered pursuant to paragraphs (v) and (vii) of
this Section 4.1(a)), and each in form and substance satisfactory to
the Liquidity Provider:
(i) This Agreement duly executed on behalf of
the borrower;
(ii) The Intercreditor Agreement duly executed
on behalf of each of the parties thereto;
(iii) Counterparts (or certified copies thereof)
of each of the Operative Agreements (other than this Agreement
and the Intercreditor Agreement) which, when taken together,
bear the signatures of all of the respective parties thereto
and which are in full force and effect in accordance with
their respective terms;
(iv) A copy of the Prospectus and specimen
copies of the Class C Certificates;
(v) Evidence that, on the Effective Date, the
Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates will receive
long-term credit ratings from Moody's of not lower than A2,
Baa2, Ba1 and Ba3, respectively, and from Standard & Poor's of
not lower than AA-, A-, BBB- and BB, respectively;
(vi) An executed or a 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,
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<PAGE> 20
remedies, powers, privileges, liens and security interests of,
or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements;
(viii) Copies of the appraisals included in the
Prospectus;
(ix) A letter from America West agreeing to
provide to the Liquidity Provider the periodic financial
reports referred to in Section 8.04(a) of the Trust
Agreements; and
(x) Such other documents, instruments,
opinions and approvals (and, if requested by the Liquidity
Provider, certified duplicates or executed copies thereof) as
the Liquidity Provider shall have reasonably requested.
(b) The following statements shall be true and shall be
deemed to have been represented by each party (other than clause (ii)
below, which shall be deemed to have been represented only by America
West) to the Refunding Agreements as being true on and as of the
Effective Date:
(i) The representations and warranties of such
Person contained in each Refunding Agreement are true and
correct on and as of the Effective Date as though made on and
as of the Effective Date; and
(ii) No event has occurred and is continuing,
or would result from the entering into of this Agreement or
the making of any Advance, which constitutes a Liquidity Event
of Default.
(c) 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.
(d) 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).
(e) The Borrower shall have received a certificate, dated the
date hereof, signed by a duly authorized
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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(e)).
Section 4.2 Conditions Precedent to Borrowing. The
obligation of the Liquidity Provider to make an Advance on the occasion of each
Borrowing shall be subject to the conditions precedent that the Effective Date
shall have occurred and, except in the case of a Final Advance, prior to the
date of such Borrowing, the Borrower shall have delivered a Notice of Borrowing
which conforms to the terms and conditions of this Agreement and has been
completed as may be required by the relevant form of the Notice of Borrowing
for the type of Advance requested.
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower. So long
as any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any
amount to the Liquidity Provider hereunder, the Borrower will, unless the
Liquidity Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements. Punctually pay
or cause to be paid all amounts payable by it under this Agreement and
the other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity
Provider with reasonable promptness, such information and data with
respect to the transactions contemplated by the Operative Agreements
as from time to time may be reasonably requested by the Liquidity
Provider; and permit the Liquidity Provider, upon reasonable notice,
to inspect the Borrower's books and records with respect to such
transactions and to meet with officers and employees of the Borrower
to discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as
any Advance shall remain unpaid or the Liquidity Provider shall have any
Commitment hereunder or the Borrower shall have any obligation to pay any
amount to the Liquidity Provider hereunder, the Borrower will not, without the
written consent of the Liquidity Provider:
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<PAGE> 22
(a) Amendments. Modify, amend or supplement, or give any
consent to any modification, amendment, or supplement, or make any
waiver with respect to, any provision of the Trust Agreements or the
Intercreditor Agreement, except for any supplemental agreement to the
Trust Agreements provided for in Section 9.01 thereof.
(b) Borrower. Appoint or permit or suffer to be appointed
any successor Borrower without the prior written approval of the
Liquidity Provider (which approval shall not be unreasonably
withheld).
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance. If (a) both (i) a Triggering
Event shall have occurred and be continuing and (ii) a Performing Note
Deficiency exists or (b) a Liquidity Event of Default shall have occurred and
be continuing, the Liquidity Provider may, in its discretion, make a Final
Advance whereupon (i) the Liquidity Provider shall have no further obligation
to make Advances hereunder, (ii) all other outstanding Advances shall be
automatically converted into Final Advances for purposes of determining the
Applicable Liquidity Rate for interest payable thereon, and (iii) subject to
Sections 2.7 and 2.9, all Advances, any accrued interest thereon and any other
amounts outstanding hereunder shall become immediately due and payable to the
Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. Except as otherwise expressly
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telecopier and mailed or delivered or sent by
telecopier):
Borrower: Fleet National Bank
777 Main Street
Hartford, CT 06115
Attention: Corporate Trust
Administration
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<PAGE> 23
Telecopy: (860) 986-7920
Liquidity
Provider: Kredietbank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Attention: General Manager
Telecopy: (212) 956-5580
or, as to each of the foregoing, at such other address as shall be designated
by such Person in a written notice to the others. All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Refunding Agreements at their respective addresses
set forth therein.
Section 7.3 No Waiver; Remedies. No failure on the part of
the Liquidity Provider to exercise, and no delay in exercising, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 7.4 Further Assurances. The Borrower agrees to do
such further acts and things and to execute and deliver to the Liquidity
Provider such additional assignments, agreements, powers and instruments as the
Liquidity Provider may reasonably require or deem advisable to carry into
effect the purposes of this Agreement and the other Operative Agreements or to
better assure and confirm unto the Liquidity Provider its rights, powers and
remedies hereunder and under the other Operative Agreements.
Section 7.5 Indemnification; Survival of Certain Provisions.
The Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Lease. In addition, the Borrower
agrees to indemnify, protect, defend and hold harmless the Liquidity Provider
from, against and in respect of, and shall pay on demand, all Expenses of any
kind or nature whatsoever, whether arising before, on or after the date hereof,
that may be imposed, incurred by or asserted against any Liquidity Indemnitee,
in any
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<PAGE> 24
way relating to, resulting from, or arising out of or in connection with, this
Agreement, the Intercreditor Agreement or the Refunding Agreements; provided,
however, that the Borrower shall not be required to indemnify, protect, defend
and hold harmless any Liquidity Indemnitee in respect of any Expense of such
Liquidity Indemnitee (i) to the extent such Expense is attributable to the
gross negligence or willful misconduct of such Liquidity Indemnitee or any
Related Indemnitee, (ii) that is ordinary and usual operating overhead expense
or (iii) to the extent such Expense is attributable to the failure by such
Liquidity Indemnitee or its Related Indemnitee to perform or observe any
agreement, covenant or condition on its part to be performed or observed in any
Operative Agreement. The indemnities contained in such Sections 10 and 13 of
the Lease, and the provisions of Sections 3.1, 3.2, 3.3, 7.5 and 7.7, shall
survive the termination of this Agreement.
Section 7.6 Liability of the Liquidity Provider. (a) Neither
the Liquidity Provider nor any of its officers or directors shall be liable or
responsible for: (i) the use which may be made of the Advances or any acts or
omissions of the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any or
all respects invalid, insufficient, fraudulent or forged; or (iii) the making
of Advances by the Liquidity Provider against delivery of a Notice of Borrowing
and other documents which do not comply with the terms hereof; provided,
however, that the Borrower shall have a claim against the Liquidity Provider,
and the Liquidity Provider shall be liable to the Borrower, to the extent of
any damages suffered by the Borrower which were the result of (A) the Liquidity
Provider's willful misconduct or negligence in determining whether documents
presented hereunder comply with the terms hereof, or (B) any breach by the
Liquidity Provider of any of the terms of this Agreement, including, but not
limited to, the Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing strictly
complying with the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable or responsible
in any respect for (i) any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with this Agreement or any Notice of Borrowing
delivered hereunder, or (ii) any action, inaction or omission which may be
taken by it in good faith, absent willful misconduct or negligence (in which
event the extent of the Liquidity Provider's potential liability to the
Borrower shall be limited as set forth in the immediately preceding paragraph),
in connection with this Agreement or any Notice of Borrowing.
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Section 7.7 Costs, Expenses and Taxes. The Borrower agrees
to pay, or cause to be paid (A) on the Effective Date and on such later date or
dates on which the Liquidity Provider shall make demand, all reasonable out-of-
pocket costs and expenses of the Liquidity Provider in connection with the
preparation, negotiation, execution, delivery, filing and recording of this
Agreement, any other Operative Agreement and any other documents which may be
delivered in connection with this Agreement, including, without limitation, the
reasonable fees and expenses of outside counsel for the Liquidity Provider and
(B) on demand, all reasonable costs and expenses of the Liquidity Provider
(including reasonable counsel fees and expenses) in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the
modification or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be delivered in
connection herewith or therewith (whether or not the same shall become
effective) or (iii) any action or proceeding relating to any order, injunction,
or other process or decree restraining or seeking to restrain the Liquidity
Provider from paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement 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 granting of participations 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,
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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 will be required to be
withheld by the Borrower or the Liquidity Provider with respect to any payments
to be made to such Participant in respect of this Agreement, (ii) furnish to
the Liquidity Provider and the Borrower either (x) a statement that it is
incorporated under the laws of the United States or a state thereof or (y) if
it is not so incorporated, two copies of a properly completed United States
Internal Revenue Service Form 4224 or Form 1001, as appropriate, or other
applicable form, certificate or document prescribed by the Internal Revenue
Service certifying, in each case, such Participant's entitlement to a complete
exemption from United States federal withholding tax in respect to any and all
payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the
date that any such form expires or becomes obsolete or (B) after the occurrence
of any event requiring a change in the most recent form previously delivered by
it and prior to the immediately following due date of any payment by the
Borrower hereunder, certifying in the case of a Form 1001 or Form 4224 that
such Participant is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it indicating that
payments hereunder are not subject to United States federal withholding tax,
the Borrower will withhold taxes as required by law from such payments at the
applicable statutory rate without any obligation to gross-up or indemnify
pursuant to Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8,
the Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
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Reserve Bank, provided that any payment in respect of such assigned Advances
made by the Borrower to the Liquidity Provider in accordance with the terms of
this Agreement shall satisfy the Borrower's obligations hereunder in respect of
such assigned Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11 Submission to Jurisdiction; Waiver of Jury
Trial.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the nonexclusive general jurisdiction of
the courts of the State of New York, the courts of the United States
of America for the Southern District of New York, and the appellate
courts from any thereof;
(ii ) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) if such party does not maintain an office for the
transaction of its business in New York, agrees that service of
process in any such action or proceeding may be effected by mailing a
copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to each party hereto at its
address set forth in Section 7.2, or at such other address of which
the Liquidity Provider shall have been notified pursuant thereto; and
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(iv ) agrees that nothing herein shall affect the right
to effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
Section 7.12 Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 7.13 Entirety. This Agreement and the other
Operative Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof and supersede all prior
understandings and agreements of such parties.
Section 7.14 Headings; Section References. Section headings
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose. Unless
the context otherwise requires or otherwise indicated herein, all Section
references in this Agreement are references to Sections hereof.
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF
THE LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
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<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 agent and trustee for the
Class C Trust, as Borrower
By
-------------------------------------
Name:
Title:
KREDIETBANK N.V., NEW YORK BRANCH,
as Liquidity Provider
By
-------------------------------------
Name:
Title:
By
-------------------------------------
Name:
Title:
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<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
June __, 1997, between the Borrower and the Liquidity Provider (the "Liquidity
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of an Interest Advance by the Liquidity Provider to be used
for the payment of interest on the Class C Certificates which was
payable on the Distribution Date falling on _____________ in
accordance with the terms and provisions of the Class C Trust
Agreement and the Class C Certificates and has not been paid pursuant
to clause sixth of Section 3.2 of the Intercreditor Agreement or
clause eighth 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 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 or the Class D 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 applied shall be commingled with other funds held
by the Borrower.
<PAGE> 31
(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 agent and trustee for the
Class C Trust, as Borrower
By
-------------------------------------
Name:
Title:
2
<PAGE> 32
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice of Borrowing]
3
<PAGE> 33
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the
undersigned subordination agent (the "Borrower"), hereby certifies to
KREDIETBANK, N.V., acting through its New York Branch (the "Liquidity
Provider"), with reference to the Irrevocable Revolving Credit Agreement, Class
C Certificates dated as of June __, 1997, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and
not otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for
the making of the Downgrade Advance by the Liquidity Provider to be
used for the funding of the Class C Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by
reason of the downgrading of the debt rating of the Liquidity Provider
issued by either Rating Agency below the applicable Threshold Rating,
which Advance is requested to be made on __________.
(3) The amount of the Downgrade Advance requested hereby (i)
is $___________, which equals the Available Commitment on the date
hereof and is to be applied in respect of the funding of the Class C
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect
to the payment of the principal of, or premium on, the Class C
Certificates, or principal of, or interest or premium on, the Class A
Certificates, the Class B Certificates or the Class D 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 agent and trustee for the
Class C Trust, 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 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 June __,
1997, 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 agent and trustee for the
Class C Trust, as Borrower
By
-------------------------------------
Name:
Title:
<PAGE> 37
Annex IV 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 agent and trustee for the
Class C Trust, as Borrower
By
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.13
INTERCREDITOR AGREEMENT
Dated as of
June __, 1997
AMONG
FLEET NATIONAL BANK,
not in its individual capacity
but solely as Trustee under the
America West Airlines Pass Through Trust 1997-1A,
America West Airlines Pass Through Trust 1997-1B,
America West Airlines Pass Through Trust 1997-1C
and
America West Airlines Pass Through Trust 1997-1D
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>
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<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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.5 Designated Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.6 Controlling Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.1 Written Notice of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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 . . . . . . . . . . . . . . . 33
SECTION 3.4 Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.5 Payments to the Trustees and the Liquidity Providers . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.6 Liquidity Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
EXERCISE OF REMEDIES . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.1 Directions from the Controlling Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.2 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.3 Discontinuance of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.4 Right of Certificateholders and Liquidity Providers to Receive Payments Not
to Be Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.5 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.1 Notice of Indenture Default or Triggering
Event, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.3 No Duties Except as Specified in Intercreditor Agreement . . . . . . . . . . . . . . . . . . . 46
SECTION 5.4 Notice from the Liquidity Providers and Trustees . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI
THE SUBORDINATION AGENT . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.1 Authorization; Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.2 Absence of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.3 No Representations or Warranties as to Documents . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.4 No Segregation of Monies; No Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.5 Reliance; Agents; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.6 Capacity in Which Acting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.7 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.8 May Become Certificateholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.9 Subordination Agent Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.10 Money to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
INDEMNIFICATION AND REIMBURSEMENT OF SUBORDINATION AGENT . . . . . . . . . . . . . . 50
SECTION 7.1 Scope of Indemnification and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.1 Replacement of Subordination Agent;Appointment of Successor . . . . . . . . . . . . . . . . . . 50
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.1 Amendments, Waivers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.2 Subordination Agent Protected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.3 Effect of Supplemental Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.4 Notice to Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.1 Termination of Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees, Liquidity Providers and
Subordination Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.5 No Oral Modifications or Continuing Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.8 Counterpart Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.9 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
Schedule 1 Indentures
Schedule 2 Refunding Agreements
iii
<PAGE> 5
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT (as amended, modified and supplemented
from time to time, this "Agreement") dated as of June __, 1997, 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 four series of Equipment Notes
to refinance the current indebtedness of such Owner Trustee originally incurred
to finance the purchase of the Aircraft 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
Underwriter proposes 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 Trust), for the benefit of the Certificateholders of such
Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriter 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
<PAGE> 6
in respect of each Class of Certificates, and the Subordination Agent, the
Trustees and the Liquidity Providers, by entering into 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) or (c) 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:
-2-
<PAGE> 7
(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 (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 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
preamble hereto.
"Aircraft" means, with respect to each Indenture, the
"Aircraft" referred to therein.
"America West" means America West Airlines, Inc., a Delaware
corporation, and its successors and assigns.
-3-
<PAGE> 8
"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 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 means the
lower of the average or the median of the most recent three LTV Appraisals of
such Aircraft obtained pursuant to Section 4.1(a)(iv).
"Appraisers" means BK Associates, Inc., Aircraft Information
Services, Inc. and Morton Beyer and Associates.
-4-
<PAGE> 9
"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 aggregate 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.
"Bankruptcy Code" has the meaning assigned to such term in the
definition hereof of "Performing Equipment Note".
"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.
"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 or a Class D 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.
-5-
<PAGE> 10
"Class A Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of June __, 1997, 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 1997-1A Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means the Pass Through Trust
Agreement dated as of June __, 1997 between America West and the Class A
Trustee, as supplemented by the Supplement No. 1997-1A thereto dated June __,
1997, 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
-6-
<PAGE> 11
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 June __, 1997, 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 1997-1B Pass
Through Trust created and administered pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Pass Through Trust
Agreement dated as of June __, 1997, between America West and the Class B
Trustee, as supplemented by the Supplement No. 1997-1B thereto dated June __,
1997, 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
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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 June __, 1997, 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 1997-1C Pass
Through Trust created and administered pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Pass Through Trust
Agreement dated as of June __, 1997, between America West and the Class C
Trustee, as supplemented by the Supplement No. 1997-1C thereto dated June __,
1997, 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.
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"Class D Trust" means America West Airlines 1997-1D 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 June __, 1997, between America West and the Class D
Trustee, as supplemented by the Supplement No. 1997-1D thereto dated June __,
1997, 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.
"Closing Date" means June __, 1997.
"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.
"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.
"Distribution Date" means a Regular Distribution Date or a
Special Distribution Date.
"Dollars" or "$" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in
Section 3.6(c).
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"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 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;
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<PAGE> 15
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 Notes" means, at any time, the Series A Equipment
Notes, the Series B Equipment Notes, the Series C Equipment Notes and the
Series D 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, upon redemption, prepayment, purchase or acceleration or otherwise)
and such payments have been distributed to the holders of such Certificates.
"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
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<PAGE> 16
amounts under such Liquidity Facility in accordance with the provisions thereof
other than a Downgrade Drawing.
"Final Legal Distribution Date" means, for the Class A
Certificates, _______________, for the Class B Certificates, _______________,
for the Class C Certificates, _______________ and for the Class D Certificates,
____________.
"Fleet" has the meaning assigned to such term in the preamble
to 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 Documents" means the "Indenture Documents" under
and as defined in each Indenture.
"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.
"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 Subordination Agent and the Trustee as its lending office hereunder.
"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.
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"Liquidity Event of Default" with respect to any Liquidity
Facility, has the meaning assigned to such term in such Liquidity Facility.
"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 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 and (ii) the outstanding principal amount of the Equipment Notes
secured by such Aircraft 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 ____%, for the
Class B Certificates ____%, for the Class C Certificates ____% and for the
Class D Certificates ____%.
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"Margin" has the meaning assigned thereto in each of the
Liquidity Facilities.
"Minimum Sale Price" means, with respect to any Aircraft or
the Equipment Notes issued in respect of such Aircraft, at any time, the lesser
of (a) 75% of the Appraised Current Market Value of such Aircraft 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.
"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
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<PAGE> 19
(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 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 to so 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
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<PAGE> 20
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.
"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 (as defined in the applicable Trust
Agreement) 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.
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"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.
"Regular Distribution Dates" means each January 2 and July 2,
commencing on July 2, 1997; provided, however, that, if any such day shall not
be a Business Day, the regular distribution shall be made on the next
succeeding Business Day without additional interest.
"Replacement Liquidity Facility" means, for any Trust, an
irrevocable revolving credit agreement in substantially the form of the initial
Liquidity Facility for such Trust, including reinstatement provisions or in
such other form (which may include a letter of credit) as shall permit the
Rating Agencies to confirm in writing their respective ratings then in effect
for the Certificates (before downgrading of such ratings, if any, as a result
of the downgrading of the Liquidity Provider), in a face amount equal to the
Required Amount for such Liquidity Facility and issued by a Replacement
Liquidity Provider, provided that, if a form of Liquidity Facility that is not
substantially in the form of the replaced Liquidity Facility is to be used,
America West shall have received a satisfactory opinion of tax counsel
satisfactory to America West with respect to such form of Replacement Liquidity
Facility and to the effect that the related Trust continues to be a "grantor
trust" (and a copy of such opinion shall be furnished to the Subordination
Agent).
"Replacement Liquidity Provider" means a Person having
unsecured debt ratings which are equal to or higher than the Threshold Rating,
who issues a Replacement Liquidity Facility.
"Required Amount" means, with respect to each Liquidity
Facility and each Cash Collateral Account related thereto, for any day, the sum
of the aggregate amount of interest, calculated at the rate per annum equal to
the Stated Interest Rate for the related Class of Certificates, that would be
payable on such Class of Certificates on each of the three successive Regular
Distribution Dates immediately following such day or, if such day is a Regular
Distribution Date, on such day and the succeeding
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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.
"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.
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"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.
"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.
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"Subordination Agent Incumbency Certificate" has the meaning
assigned to such term in Section 2.5(a).
"Subordination Agent Representatives" has the meaning assigned
to such term in Section 2.5(a).
"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, 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 or the Class D Trust.
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"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 or Class D Trust Agreement.
"Trustee" means any of the Class A Trustee, the Class B
Trustee, the Class C Trustee or the Class D Trustee.
"Trustee Incumbency Certificate" has the meaning assigned to
such term in Section 2.5(b).
"Trustee Representatives" has the meaning assigned to such
term in Section 2.5(b).
"Underwriter" means Morgan Stanley & Co. Incorporated.
"Underwriting Agreement" means the Underwriting Agreement
dated _________ __, 1997, among the Underwriter, America West, GPA Group plc
and GPA Leasing USA Sub I, Inc. relating to the purchase of the Certificates by
the Underwriter, 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
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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(b), 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 Section
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 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
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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 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
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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 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
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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 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
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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;
and
eighth, 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 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,
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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 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
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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 4.03 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 securing such
Equipment Notes), by the Controlling Party.
(b) The Person who shall be the "Controlling Party" with
respect to any Indenture shall be: (w) the Class A Trustee; (x) upon payment of
Final Distributions to the holders of Class A Certificates, the Class B
Trustee; (y) upon payment of Final Distributions to the holders of Class B
Certificates, the Class C Trustee; and (z) upon payment of Final Distributions
to the holders of Class C Certificates, the Class D 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 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
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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;
(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; and
(v) With respect to each Liquidity Facility, the
Liquidity Provider thereunder shall separately set forth the
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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), "fifth" 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), "fifth" 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 paid in
accordance with clauses "first" (relating to indemnity payments made
by the Class C Certificateholders), "fifth" 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), "fifth" and "ninth" of Section 3.3
hereof; and
(v) 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.
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(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.
(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 "seventh" of Section 2.4(b),
clauses "first" through "eighth" of Section 3.2 and clauses "first" through
"ninth" 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
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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 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;
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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;
and
eighth, 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 Trust Indenture Estate (as defined in the relevant Indenture),
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
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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), 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;
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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; and
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.
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 of funds at the address such
Trustee shall provide to the Subordination Agent.
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
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to such Class of Certificates in payment of such accrued interest.
(b) Application of Interest Drawings. Notwithstanding
anything to the contrary contained in this Agreement, (i) all payments received
by the Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from
the Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee, (ii)
all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) Downgrade Drawings. If at any time the debt rating
of any Liquidity Provider issued by either Rating Agency is lower than the
applicable Threshold Rating, within 30 days after receiving notice of such
downgrading (but no later than the expiration date of the Liquidity Facility
issued by the downgraded Liquidity Provider (the "Downgraded Facility")), such
Liquidity Provider may arrange, or the Subordination Agent (in consultation
with America West (whose recommendations the Subordination Agent will accept))
may arrange, for a Replacement Liquidity Provider to issue and deliver a
Replacement Liquidity Facility to the Subordination Agent. If a Downgraded
Facility has not been replaced in accordance with the terms of this paragraph,
the Subordination Agent shall, on such 30th day (or if such 30th day is not a
Business Day, on the next succeeding Business Day) (or, if earlier, the
expiration date of such Downgraded Facility), request a drawing in accordance
with and to the extent permitted by such Downgraded Facility (such drawing, a
"Downgrade Drawing") of all available and undrawn amounts thereunder. Amounts
drawn pursuant to a Downgrade Drawing shall be maintained and invested as
provided in Section 3.6(f) hereof.
(d) [Reserved.]
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(e) Issuance of Replacement Liquidity Facility. At
any time, the Subordination Agent may, at its option, in consultation with
America West (whose recommendations the Subordination Agent will accept),
arrange for a Replacement Liquidity Facility to replace the Liquidity Facility
for any Class of Certificates; provided that the initial Liquidity Provider may
not be replaced pursuant to this paragraph unless (i) there shall have become
due to the initial Liquidity Provider amounts pursuant to Section 3.1, 3.2 or
3.3 of the Liquidity Facilities and the replacement of the initial Liquidity
Provider would reduce or eliminate the obligation to pay such amounts, (ii) it
shall become unlawful or impossible for the initial Liquidity Provider (or its
Lending Office) to maintain or fund its LIBOR Advances as described in Section
3.10 of each Liquidity Facility or (iii) a Downgrade Drawing shall have
occurred under any Liquidity Facility. In any such consultation, the
Subordination Agent shall accept the recommendations of America West in the
absence of a good faith reason not to do so. In addition to any such
replacement by the Subordination Agent, the Liquidity Provider with respect to
any Liquidity Facility may arrange for a Replacement Liquidity Facility to
replace such Liquidity Facility under the circumstances set forth in Section
3.10 of such Liquidity Facility. If a 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 Replacement Liquidity Facility shall
become effective and no 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 (or, in the case of clause (z) below if a
Liquidity Provider is replacing a Liquidity Facility in accordance with Section
3.10 of such Liquidity Facility, such Liquidity Provider) 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
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3.6(c) hereof), (y) pay all Liquidity Obligations then owing to the replaced
Liquidity Provider (which payment shall be made first from available funds in
the Cash Collateral Account as described in clause (vii) of Section 3.6(f)
hereof and thereafter from any other available source, including, without
limitation, a drawing under the Replacement Liquidity Facility, it being
understood that no Replacement Liquidity Facility shall become effective (other
than insofar as necessary to permit the repayment of amounts owed to the
replaced Liquidity Provider) until all amounts owed to the replaced Liquidity
Provider have been paid) and (z) cause the issuer of the Replacement Liquidity
Facility to deliver the Replacement Liquidity Facility to the Subordination
Agent, together with a legal opinion opining that such Replacement Liquidity
Facility is an enforceable obligation of such Replacement Liquidity Provider.
Upon satisfaction of the conditions set forth in this Section 3.6(e), (i) the
replaced Liquidity Facility shall terminate and (ii) such Replacement Liquidity
Provider shall be deemed to be a Liquidity Provider with the rights and
obligations of a Liquidity Provider hereunder and under the other Operative
Agreements and such Replacement Liquidity Facility shall be deemed to be a
Liquidity Facility hereunder and under the other Operative Agreements.
(f) Cash Collateral Accounts; Withdrawals;
Investments. In the event the Subordination Agent shall draw all available
amounts under the Class A Liquidity Facility, the Class B Liquidity Facility or
the Class C Liquidity Facility pursuant to Section 3.6(c) or a Final Drawing
shall be made as provided in the Liquidity Facility, amounts so drawn shall be
deposited by the Subordination Agent in the Class A Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral Account,
respectively. Amounts so deposited shall be invested in Eligible Investments
in accordance with Section 2.2(b) hereof. Investment Earnings on amounts on
deposit in the Cash Collateral Accounts shall be deposited in the Collection
Account. In addition, from and after the date funds are so deposited, the
Subordination Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent
shall, to the extent it shall not have received funds to pay accrued
and unpaid interest on the Class A Certificates (at the Stated
Interest Rate for the Class A Certificates) from any other source,
withdraw from the Class A Cash Collateral Account, and pay to the
Class A Trustee an amount equal to the lesser of (x) an amount
necessary to pay accrued and unpaid interest (at the Stated Interest
Rate for the Class A Certificates) on such Class A Certificates
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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 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
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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 (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
Certificates), on the date on which the Subordination Agent shall have
been notified
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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 of such Interest Drawing so reimbursed to the applicable Liquidity
Provider; provided, however, that such Liquidity Facility shall not be so
reinstated in part or in full at any time if (x) both (i) a Triggering Event
shall have occurred and (ii) a Performing Note Deficiency exists or (y) a
Liquidity Event of Default shall have occurred and be continuing under such
Liquidity Facility. In the event that at any time prior to both the occurrence
of a Triggering Event and the existence of a Performing Note Deficiency funds
are withdrawn from any Cash Collateral Account pursuant to clauses (i), (ii) or
(iii) of Section 3.6(f) hereof, then funds received by the Subordination Agent
prior to both the occurrence of a Triggering Event and the existence of a
Performing Note Deficiency shall be deposited in such Cash Collateral Account
as provided in clause "third" of Section 2.4(b)(i), clause "third" of Section
3.2 or clause "fourth" of Section 3.3, as applicable, and applied in accordance
with Section 3.6(f) hereof.
(h) Reimbursement. The amount of each drawing under the
Liquidity Facilities shall be due and payable, together with interest thereon,
on the dates and at the rates, respectively, provided in the Liquidity
Facilities.
(i) Final Drawing. If any action is expressly required
under a Liquidity Facility to be taken by the Subordination Agent in order to
make a Final Drawing thereunder, the Subordination Agent shall not fail to take
such action. Upon receipt of the proceeds of a Final Drawing under the related
Liquidity Facility, the Subordination Agent shall maintain and invest such
proceeds in accordance with Section 3.6(f) hereof.
(j) Reduction of Stated Amount. Promptly following each
date on which the Required Amount of the Liquidity Facility for a Class of
Certificates is reduced as a result of a distribution to the Certificateholders
of such Class of
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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.
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
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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 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 or such Equipment Notes, and (B)
the amount and payment dates of rentals payable by America West under the Lease
for such Aircraft 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.
(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 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 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).
(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 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 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
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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 Proceeding shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such
case each such party shall, subject to any determination in such proceedings,
be restored to its former position and rights hereunder, and all rights,
remedies and powers of such party shall continue as if no such Proceeding had
been instituted.
SECTION 4.4 Right of Certificateholders and Liquidity
Providers 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
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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 Aircraft subject to such Lease, 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, Etc. (a) In the event the Subordination Agent shall have actual
knowledge of the occurrence of an Indenture Default or a Triggering Event, as
promptly as practicable, and in any event within 10 days after obtaining
knowledge thereof, the Subordination Agent shall transmit by mail to the Rating
Agencies, the Liquidity Providers and the Trustees notice of such Indenture
Default or Triggering Event, unless such Indenture Default or Triggering Event
shall have been cured or waived. For all purposes of this Agreement, in the
absence of actual knowledge on the part of a Responsible Officer, the
Subordination Agent shall not be deemed to have knowledge of any Indenture
Default or Triggering Event unless notified in writing by one or more Trustees,
one or more Liquidity Providers or one or more Certificateholders.
(b) Other Notices. The Subordination Agent will furnish
to each Liquidity Provider and Trustee, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and other instruments furnished to the Subordination Agent
as registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been required to be
directly distributed to such Liquidity Provider or
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Trustee, as applicable, pursuant to the express provision of any other
Operative Agreement.
(c) Determinations and Notice. The Subordination Agent
agrees to make the determinations and notifications required to be made by it
pursuant to Section 2.02 of each Indenture.
SECTION 5.2 Indemnification. The Subordination Agent shall
not be required to take any action or refrain from taking any action under
Section 5.1 (other than the first sentence thereof) or Article IV hereof unless
the Subordination Agent shall have been indemnified (to the extent and in the
manner reasonably satisfactory to the Subordination Agent) against any
liability, cost or expense (including counsel fees and expenses) which may be
incurred in connection therewith. The Subordination Agent shall not be under
any obligation to take any action under this Agreement and nothing contained in
this Agreement shall require the Subordination Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity 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 of subsection (a) thereof) or
Article IV hereof, nor shall any other provision of this Agreement be deemed to
impose a duty on the Subordination Agent to take any action, if the
Subordination Agent shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to law.
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to
take or refrain from taking any action under, or in connection with, this
Agreement, except as expressly provided by the terms of this Agreement; and no
implied duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to discharge duly all Liens on
any of the Trust Accounts or any monies deposited therein which result from
claims against it in its individual capacity not related to its activities
hereunder or any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees.
If a Responsible Officer of any Liquidity Provider or
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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 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 (other than for the handling of
funds, for which the standard of accountability shall be negligence) and (b)
for liabilities that may result from the material inaccuracy of any
representation or warranty of the Subordination Agent made in its individual
capacity in any Operative Agreement. The Subordination Agent shall not be
liable for any error of judgment made in good faith by a Responsible Officer of
the Subordination Agent, unless it is proved that the Subordination Agent was
grossly negligent in ascertaining the pertinent facts.
SECTION 6.2 Absence of Duties. The Subordination Agent shall
have no duty to see to any recording or filing of this Agreement or any other
document, or to see to the maintenance of any such recording or filing.
SECTION 6.3 No Representations or Warranties as to Documents.
The Subordination Agent in its individual capacity does not make nor shall be
deemed to have made any representation or warranty as to the validity, legality
or enforceability of this Agreement or any other Operative Agreement or as to
the
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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 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
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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 thereof or of the District of Columbia having a
combined capital and surplus of at least $100,000,000 (or the obligations of
which, whether now in existence or hereafter incurred, are fully and
unconditionally guaranteed by a corporation organized and doing business under
the laws of the United States, any State thereof or of the District of Columbia
and having a combined capital and surplus of at least $100,000,000), if there
is such an institution willing and able to perform the duties of the
Subordination Agent hereunder upon reasonable or customary terms. Such
corporation shall be a citizen of the United States and shall be authorized
under the laws of the United States or any State thereof or of the District of
Columbia to exercise corporate trust powers and shall be subject to supervision
or
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examination by federal, state or District of Columbia authorities. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of any of the aforesaid supervising or examining
authorities, then, for the purposes of this Section 6.9, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
In case at any time the Subordination Agent shall cease to be
eligible in accordance with the provisions of this Section, the Subordination
Agent shall resign immediately in the manner and with the effect specified in
Section 8.1.
SECTION 6.10 Money to Be Held in Trust. All Equipment Notes,
monies and other property deposited with or held by the Subordination Agent
pursuant to this Agreement shall be held in trust for the benefit of the
parties entitled to such Equipment Notes, monies and other property. All such
Equipment Notes, monies or other property shall be held in the trust department
of the institution acting as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION AND REIMBURSEMENT OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification and Reimbursement. The
Subordination Agent shall be indemnified hereunder to the extent and in the
manner described in Sections 10 and 13 of the Leases and shall be reimbursed
for expenses to the extent and in the manner described in Section 21 of the
Refunding Agreements. The indemnities or rights to reimbursement for expenses
contained in such Sections of the Leases and the Refunding Agreements shall
survive the termination of this Agreement.
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 Providers 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.
A successor Subordination Agent shall deliver a written
acceptance of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent, upon which the resignation or removal of the retiring
Subordination Agent shall become effective, and the successor Subordination
Agent shall have all the rights, powers and duties of the Subordination Agent
under this Agreement. The successor Subordination Agent shall mail a notice of
its succession to the Liquidity Providers and the Trustees. The retiring
Subordination Agent shall promptly transfer its rights under each of the
Liquidity Facilities and all of the property held by it as Subordination Agent
to the successor Subordination Agent.
If a successor Subordination Agent does not take office within
60 days after the retiring Subordination Agent resigns or is removed, the
retiring Subordination Agent or one or more of the Trustees may petition any
court of competent jurisdiction for the appointment of a successor
Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9
hereof (to the extent applicable), one or more of the Trustees or one or more
of the Liquidity Providers may petition
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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.
Notwithstanding the foregoing, 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 (including the corporate trust business
in respect of this Agreement), 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. The parties hereto acknowledge
that Fleet intends to sell its corporate trust business (including the
corporate trust business in respect of this Agreement) to State Street Bank and
Trust Company or an affiliate thereof in 1997. Upon such sale, and subject to
the terms of Section 6.9 hereof, such purchaser shall 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 Purchaser
shall give prompt subsequent notice of such transaction to the Liquidity
Provider and each Trustee.
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
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<PAGE> 57
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 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; and provided further that no
amendment of or supplement to the 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 without the consent of each Liquidity
Provider, have any of the effects listed in the proviso to Section 9.01(b) of
the Indenture.
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.
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<PAGE> 58
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 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 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
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
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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 it 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.
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
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<PAGE> 60
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 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
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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,
any of the Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other
obligor with respect to any amounts owing to it hereunder, including,
in the case of the Liquidity Providers, any of the Liquidity
Obligations,
(iii) renew, extend, increase, alter or exchange any amounts
owing to it hereunder, including, in the case of the Liquidity
Providers, any of the Liquidity Obligations, or release or compromise
any obligation of any obligor with respect thereto,
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<PAGE> 62
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a
subordinated party or a surety under applicable law.
SECTION 10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
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<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written, and acknowledge that
this Agreement has been made and delivered in the City of New York, and this
Agreement has become effective only upon such execution and delivery.
FLEET NATIONAL BANK,
not in its individual capacity but
solely as Trustee for each of the
Trusts
By
-----------------------------------
Name:
Title:
KREDIETBANK N.V.,
NEW YORK BRANCH,
as Class A Liquidity Provider,
Class B Liquidity Provider and
Class C Liquidity Provider
By
-----------------------------------
Name:
Title:
By
-----------------------------------
Name:
Title:
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly set forth
herein but solely as Subordination
Agent and Trustee
By
-----------------------------------
Name:
Title:
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<PAGE> 64
SCHEDULE 1 TO
INTERCREDITOR AGREEMENT
Indentures
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-7]
dated as of June __, 1997 between Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-8]
dated as of June __, 1997 between Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-9]
dated as of June __, 1997 between Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-11]
dated as of June __, 1997 between Wilmington Trust Company, not in its
individual capacity except as expressly provided therein but solely as Owner
Trustee and The Chase Manhattan Bank, not in its individual capacity except as
expressly provided therein but solely as Indenture Trustee
<PAGE> 65
SCHEDULE 2 TO
INTERCREDITOR AGREEMENT
Refunding Agreements
Refunding Agreement [GPA 1989 BN-7] dated as of June __, 1997 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, DFO Partnership, as Owner Participant, Fleet
National Bank, as Subordination Agent, and The Chase Manhattan Bank, not in its
individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1989 BN-8] dated as of June __, 1997 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, DFO Partnership, as Owner Participant, Fleet
National Bank, as Subordination Agent, and The Chase Manhattan Bank, not in its
individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1989 BN-9] dated as of June __, 1997 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, DFO Partnership, as Owner Participant, Fleet
National Bank, as Subordination Agent, and The Chase Manhattan Bank, not in its
individual capacity except as expressly provided therein but solely as
Indenture Trustee
Refunding Agreement [GPA 1989 BN-11] dated as of June __, 1997 among America
West Airlines, Inc., as Lessee, GPA Leasing USA Sub I, Inc., as Original Head
Lessee, GPA Group plc, as Parent Guarantor, Wilmington Trust Company, not in
its individual capacity except as expressly provided therein but solely as
Owner Trustee, Fleet National Bank, not in its individual capacity except as
expressly provided therein but solely as Pass Through
<PAGE> 66
Trustee under each of the Pass Through Trust Agreements, DFO Partnership, as
Owner Participant, Fleet National Bank, as Subordination Agent, and The Chase
Manhattan Bank, not in its individual capacity except as expressly provided
therein but solely as Indenture Trustee
-2-
<PAGE> 1
Exhibit 4.14
- --------------------------------------------------------------------------------
REFUNDING AGREEMENT
[GPA 1989 BN-8]
Dated as of June ___, 1997
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[_______________],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
- --------------------------------------------------------------------------------
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 66
Registration No. N627AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. Purchase of Equipment Notes; Refunding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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 Original
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. Amendment and Restatement of the Original Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 8. Representations and Warranties of the Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10. Transfer of Owner Participant's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 11. Re-Registration of the Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 12. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 13. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 14. Certain Additional Provisions Relating to
Original Head Lessee, Parent Guarantor, Trust
Company, Owner Trustee and Owner Participant . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 15. Certain Retained Rights and Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 16. Certain Additional Obligations of the Lessee,
the Owner Trustee, the Owner Participant and
the Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 17. Lessee Protection of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 18. Jurisdictional and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 19. Limitation on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 21. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 22. Reliance of Liquidity Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 23. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 24. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 25. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Pass Through Trusts and Purchase Price
Schedule III Holders of Equipment Notes - Payment Instructions
Exhibits
Exhibit A Form of Transferee's Parent Guarantee
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C List of Countries
Exhibit D Form of Insurance Broker's Report
Annex
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1989 BN-8]
REFUNDING AGREEMENT [GPA 1989 BN-8] (this "Agreement"), dated
as of June ___, 1997, 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 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, Air Tara Hong Kong,
Limited, a Cayman Islands corporation ("AT Offshore"), the Parent Guarantor,
the Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi
Trust and Banking Corporation Grand Cayman Branch, as Lenders (the "Lenders"),
the Owner Trustee and the Indenture Trustee are parties to the Participation
Agreement [GPA 1989 BN-8], dated as of December 19, 1989 (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, (i) AT Offshore and The Shamrock II Leasing Limited
Partnership (the "Foreign Lessor") entered into the Aircraft Hire Purchase
Agreement dated as of December 19, 1989 (as the same may be amended, modified
or supplemented from time to time in accordance with the terms thereof and of
the Operative Documents, the "Hire Purchase Agreement") whereby, subject to the
terms and conditions set forth therein, AT Offshore agreed to hire to Foreign
Lessor, and Foreign Lessor
<PAGE> 5
agreed to hire from AT Offshore, the Aircraft, (ii) Foreign Lessor and GPA
HK-320-B, Limited ("GPA Offshore") entered into the Aircraft Lease Agreement,
dated the date thereof (as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof and of the Operative
Documents, the "Foreign Lease Agreement") whereby, subject to the terms and
conditions set forth therein, Foreign Lessor agreed to lease to GPA Offshore,
and GPA Offshore agreed to lease from Foreign Lessor, the Aircraft, (iii) GPA
Offshore assigned to Owner Trustee all of its rights (but none of its
obligations (other than in respect of certain sales agency arrangements
referred to therein)) under the Foreign Lease Agreement, (iv) Foreign Lessor
under a Consent dated as of 19 December 1989 (by virtue of the General
Assumption Agreement and the Payment Assumption Agreement) released and
discharged GPA Offshore from all of its obligations, agreements and liabilities
under the Foreign Lease Agreement (excluding the sales agency obligations
referred to therein) and agreed to look solely to GPAG Caymans, Limited ("GPAG
Caymans"), a subsidiary of the Parent Guarantor, and certain other Persons for
the payment, performance and satisfaction of all such obligations, agreements
and liabilities (other than the sales agency obligations referred to in the
Foreign Lease Agreement) and further waived, released and discharged for itself
and its successors and assigns any and all rights to hold the Owner Trustee or
its successors and assigns liable for any of the obligations, agreements or
liabilities of GPA Offshore under the Foreign Lease Agreement (other than in
relation to the sales agency obligations referred to therein), (v) the Parent
Guarantor (A) arranged for the assumption by one or more financial institutions
of all monetary obligations of GPA Offshore under the Foreign Lease Agreement
(other than certain indemnity obligations as to which Foreign Lessor agreed to
limit its recourse to claims against GPAG Caymans) and (B) obtained the
confirmation from the Foreign Lessor under a Deed of Consent dated December 20,
1994 that upon the termination of the Hire Purchase Agreement and/or the
Foreign Lease Agreement that the Foreign Lessor would have no right to retain
or assert any interest in the Aircraft, (vi) AT Offshore assigned all of its
rights (but none of its obligations) under the Hire Purchase Agreement to the
Owner Trustee and (vii) the Owner Trustee assigned to the Indenture Trustee all
of its right, title and interest in and to the Foreign Financing Documents to
secure the Secured Obligations referred to in the Indenture, all on and subject
to the terms and conditions thereof;
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-8], dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1, dated
December 29, 1989 (as so 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
- 2 -
<PAGE> 6
the Lenders as evidence of the indebtedness then being made by the Owner
Trustee to finance a portion of the purchase price of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1989 BN-8], dated as of December 19,
1989, as supplemented by Lease Supplement [GPA 1989 BN-8] No. 1 dated December
29, 1989 and as further supplemented by Lease Supplement [GPA 1989 BN-8] No. 2
dated December 29, 1994 (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-8] 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, the Owner Participant and the Trust Company are
parties to the Trust Agreement [GPA 1989 BN- 8], dated as of December 19, 1989,
as supplemented by Trust Agreement Supplement [GPA 1989 BN-8] No. 1 dated
December 29, 1989 (as amended, supplemented or otherwise modified to the date
hereof, the "Original Trust Agreement"), pursuant to which the Owner Trustee
agreed, among other things, to hold the Trust Estate defined in Section 1.1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, the Owner Participant and the Original Head Lessee
are parties to the Head Lease Tax Indemnification Agreement [GPA 1989 BN-8],
dated as of December 19, 1989 (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 1989 BN-8] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 dated September 28, 1990 and as
amended by Amendment No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-8] dated
as of June 25, 1991, and as further amended by Amendment No. 2 to Aircraft
Sublease Agreement [GPA 1989 BN-8] dated as of August 26, 1991 (as amended,
supplemented or otherwise modified to the date hereof, the
- 3 -
<PAGE> 7
"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 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-8], dated as of September 21, 1990
(as amended, modified or otherwise supplemented to the date hereof, the
"Sublease TIA");
WHEREAS, concurrently with the execution and delivery of the
Sublease, the Sublessor and the Owner Trustee entered into the Assignment of
Sublease [GPA 1989 BN-8] dated as of September 21, 1990 (as amended, modified
or otherwise supplemented to the date hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1989
BN-8], dated as of the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in four series, the proceeds from the issuance
and sale of which will be applied in part to the prepayment in full of the
Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-8] 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
- 4 -
<PAGE> 8
accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement, amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
four separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate
as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, 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
- 5 -
<PAGE> 9
set forth herein, on June ___, 1997 or on such other date agreed to by the
parties hereto (the "Restatement Date"), the following actions shall take place
simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor
as a payment of Supplemental Rent under the Sublease all
accrued and unpaid Rent under the Sublease up to the
Restatement Date, if any (less any amounts for which Sublessee
is indemnified by Sublessor) and (B) the Original Head Lessee
shall pay to the Owner Trustee, as a payment of Supplemental
Rent under the Original Lease, an amount equal to the accrued
and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment
Amount") equal to all other amounts due to the holders of the
Original Certificates under the Original Indenture and the
other Operative Documents (as defined in the Original
Indenture) payable on the Restatement Date under Section 2.13
of the Original Indenture;
(ii) the Pass Through Trustee for each Pass
Through Trust shall pay to the Owner Trustee the aggregate
purchase price of the Equipment Notes being issued to such
Pass Through Trustee as set forth in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds
received under clauses (i) and (ii)) shall pay to the
Indenture Trustee for the benefit of the holders of the
Original Certificates an amount equal to the aggregate
principal amount of the Original Certificates outstanding on
the Restatement Date, together with accrued and unpaid
interest on the Original Certificates up to but not including
the Restatement Date plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the
holders of the Original Certificates the amounts of principal,
interest, and all other amounts, 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);
- 6 -
<PAGE> 10
(vii) the Original Head Lessee, the Sublessee, the
Owner Trustee and the Indenture Trustee shall enter into Lease
Amendment No. 1;
(viii) the Owner Participant and the Trust Company
shall enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner
Participant shall enter into the Amended and Restated Head
Lease TIA and the Sublessor and the Sublessee shall enter into
the Amended and Restated Sublease TIA;
(x) the Original Head Lessee, GPA Leasing USA I,
Inc., the Parent Guarantor and the Lessee shall enter into an
agreement in form and substance reasonably satisfactory to
each, inter alia, confirming the termination of certain rights
which the Parent Guarantor has to "put" aircraft to the Lessee
and the obligation of the Lessee to accept and lease such
aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of
its affiliates and the Lessee will enter into an agreement
(the "Deed of Indemnity") pursuant to which the Parent
Guarantor and/or one or more of its affiliates, on the one
hand, and the Lessee, on the other, will indemnify each other
with respect to certain information included in the Prospectus
and the Registration Statement (as such terms are defined in
the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Equipment Notes of the maturity and aggregate
principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(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
- 7 -
<PAGE> 11
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, the Parent Guarantor and the Lessee have
entered into the Underwriting Agreement, dated as of the date hereof (the
"Underwriting Agreement"), among such Persons and Morgan Stanley & Co.
Incorporated (the "Underwriter"), 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.
- 8 -
<PAGE> 12
(b) The Pass Through Trustee, the Owner Trustee, the
Indenture Trustee and the Owner Participant each shall have received executed
counterparts of each of the following documents:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and Trust
Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and each
Pass Through Trust Supplement set forth in Schedule I
hereto;
(6) the Intercreditor Agreement;
(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 Termination and Release [GPA 1989 BN-8] dated as
of the Restatement Date among [__________], the
Lessee, the Original Head Lessee, the Parent
Guarantor, the Owner Participant, the Owner Trustee
and the Indenture Trustee.
(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
- 9 -
<PAGE> 13
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 an 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 and the
Original Indenture have each been duly recorded, and the
Original Trust Agreement has been duly filed, with the FAA
pursuant to the sections of Title 49 of the United States Code
relating to aviation (the "Federal Aviation Act");
(3) Lease Amendment No. 1, the Amended and Restated
Lease, Lease Supplement No. 3, the First Amended and Restated
Indenture, Trust Indenture Supplement No. 2 and Trust
Supplement No. 2 covering the Aircraft shall have been duly
filed for recordation with the FAA pursuant to the Federal
Aviation Act;
(4) the Aircraft has been registered with the FAA in
the name of the Owner Trustee;
(5) the Lessee has authority to operate the
Aircraft; and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement
- 10 -
<PAGE> 14
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
or an Assistant Secretary 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 organization certificate and
by-laws of the Indenture Trustee, each certified by the
Secretary or an Assistant Secretary of the Indenture Trustee;
and
(4) a certificate signed by an authorized officer of
the Indenture Trustee, dated the Restatement Date, certifying
that the representations and warranties contained herein of
the Indenture Trustee are correct as though made on and as of
the Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(f) The Pass Through Trustee, the Indenture Trustee and the
Owner Participant each shall have received the following:
(1) an incumbency certificate of the Owner Trustee
as to the person or persons authorized to execute and deliver
this Agreement and each of the other documents to be executed
on behalf of the Owner Trustee in connection with the
transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
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<PAGE> 15
(2) a copy of the resolutions of the board of
directors of the Owner Trustee, certified by the Secretary or
an Assistant Secretary of the Owner Trustee, duly authorizing
the transactions contemplated hereby and the execution,
delivery and performance of each of the documents required to
be executed and delivered on behalf of the Owner Trustee in
connection with the transactions contemplated hereby;
(3) a copy of the articles of association and
by-laws of the Owner Trustee, each certified by the Secretary
or an Assistant Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of
the Owner Trustee, dated the Restatement Date, certifying that
the representations and warranties contained herein of the
Owner Trustee are correct as though made on and as of the
Restatement Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties are
correct on and as of such earlier date).
(g) The Pass Through Trustee, the Indenture Trustee and the
Owner Trustee each shall have received the following:
(1) a secretary's certificate of Security Pacific
Leasing Corporation, the managing partner of the Owner
Participant (the "Managing Partner"), as to (i) the
Certificate of Incorporation and By-laws of the Managing
Partner, (ii) the General Operating Resolution of the Managing
Partner and (iii) the incumbency and signatures of persons
authorized pursuant to such General Operating Resolution to
execute and deliver this Agreement and each of the other
documents to be executed by the Managing Partner on behalf of
the Owner Participant in connection with the transactions
contemplated hereby (including, without limitation, each of
the documents referred to herein);
(2) a copy of the resolutions of the board of
directors of the Managing Partner, certified by the Secretary
or an Assistant Secretary of the Managing Partner, duly
authorizing the Managing Partner to perform the rights and
duties of the managing partner of the Owner Participant under
the Partnership Agreement (as herein defined);
(3) a certificate of an officer of the Managing
Partner certifying as to excerpts from the partnership
agreement between the partners of the Owner Participant, as
amended to the Restatement Date, and as in full force and
effect as of the Restatement Date
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<PAGE> 16
(which a complete version thereof shall be the "Partnership
Agreement");
(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); and
(5) resolutions of the partners of the Owner
Participant or other satisfactory evidence evidencing the
consent or approval by each of the partners thereof of the
execution and delivery of this Agreement and the agreements
referred to herein to which the Owner Participant is a party
and the performance by the Owner Participant of such
agreements and the transactions contemplated thereby.
(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 the 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)
White & Case, special counsel for the Owner Participant, and (ii) in-house
counsel for the Managing
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<PAGE> 17
Partner, in each case in form and substance satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case, special
counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity
Provider, in each case in form and substance satisfactory to each of them.
(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, 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 Underwriter 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
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<PAGE> 18
transactions contemplated by this Agreement on the Restatement Date.
(u) All approvals and consents of any trustee or holder of
any indebtedness or obligations of the Lessee which are required in connection
with the Pass Through Trustee's making of the payments described in Section
1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the
transactions contemplated by this Agreement on the Restatement Date shall have
been duly obtained.
(v) Uniform Commercial Code financing, termination, amendment
and continuation statement or statements covering all of the security interests
created by or pursuant to the Indenture that are not covered by the recording
system established by the Federal Aviation Act shall have been executed and
delivered by the Original Head Lessee, the Lessee, the Indenture Trustee and
the Owner Trustee, as the case may be, and such financing, termination,
amendment and continuation statement or statements or documents to the same
purposes shall have been duly filed in all places necessary or advisable, and
any additional Uniform Commercial Code financing, termination, amendment and
continuation statements deemed advisable by the Original Head Lessee, the
Lessee, the Owner Participant or the Indenture Trustee shall have been executed
and delivered by the Original Head Lessee, the Lessee, the Indenture Trustee or
the Owner Trustee, as the case may be, and duly filed in all places advisable.
(w) No change shall have occurred after the date of this
Agreement in applicable law or regulations thereunder or interpretations
thereof by appropriate regulatory authorities or any court that would adversely
affect the tax consequences of the transactions contemplated by this Agreement
to the Owner Participant, the Owner Trustee or any of their respective
Affiliates.
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.
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<PAGE> 19
(a) The obligations of the Original Head Lessee and the Parent Guarantor to
participate in the transactions contemplated by this Agreement on the
Restatement Date, and to execute and deliver this Agreement are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) Each of the Original Head Lessee and the Parent
Guarantor shall have received counterparts of the following documents
executed by each of the parties thereto other than the Original Head
Lessee and the Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination statements
relating to the Original Head Lease executed by
the Owner Trustee and/or the Indenture Trustee
and such other releases and terminations as it
may reasonably request; and
(9) that certain letter agreement dated as of the
Restatement Date relating to Stipulated Loss
Values with respect to the Amended and Restated
Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent
Guarantor shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee referred
to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i), Section
3(j), Section 3(k), Section 3(l), Section 3(m)
and Section 3(n), in each case
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<PAGE> 20
addressed to each of the Original Head Lessee and
the Parent Guarantor and in form and substance
satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky & Walker
LLP and Milbank, Tweed, Hadley & McCloy with
respect to certain matters relating to and
described in the Prospectus, in each case
addressed to the Original Head Lessee and the
Parent Guarantor and in form and substance
reasonably satisfactory to each of them; and
(6) the report referred to in Section 3(h) addressed
to each of the Original Head Lessee and the
Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated
Lease and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
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<PAGE> 21
(8) Uniform Commercial Code termination statements
relating to the Sublease executed by the Original
Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original Head
Lessee and Parent Guarantor referred to in
Section 3(c)(1);
(2) the resolutions of the Original Head Lessee and
Parent Guarantor referred to in Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j), Section
3(k), Section 3(l), Section 3(m), Section 3(n),
Section 3(o) and Section 3(p), in each case
addressed to Lessee and in form and substance
satisfactory to Lessee; and
(5) the opinions of Paul, Hastings, Janofsky & Walker
LLP and Milbank, Tweed, Hadley & McCloy with
respect to certain matters relating to and
described in the Prospectus, in each case
addressed to Lessee and in form and substance
reasonably satisfactory to Lessee.
(iii) The Lessee shall have received such other documents and
evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and
the "Refunding Agreements" (as defined in the Registration Statement),
the taking of all necessary action in connection therewith and
compliance with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the
Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the
Owner Participant, the Owner Trustee and the Indenture Trustee to participate
in the transactions contemplated hereby is subject to the receipt by each of
them of (i) a certificate signed by an authorized officer of the Pass Through
Trustee, dated the Restatement Date, certifying that the representations and
warranties contained herein and in the Pass 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
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<PAGE> 22
which case such representations and warranties are correct on and as of such
earlier date), (ii) an opinion addressed to each of them of Shipman & Goodwin
LLP, special counsel for the Pass Through Trustee, in form and substance
satisfactory to each of them, and (iii) such other documents and evidence with
respect to the Pass Through Trustee as it may reasonably request in order to
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all necessary action in connection therewith and
compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent
set forth herein, the Owner Participant, by execution and delivery hereof,
requests, authorizes and directs the Owner Trustee to execute and deliver the
First Amended and Restated Indenture, and the Owner Trustee and the Indenture
Trustee, by execution and delivery hereof, agree to execute and deliver the
First Amended and Restated Indenture. Each of the Original Head Lessee, the
Parent Guarantor and the Lessee, by execution and delivery hereof, consent to
such execution and delivery of the First Amended and Restated Indenture. The
First Amended and Restated Indenture shall be effective as of the Restatement
Date.
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease
Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture
Trustee and the Sublessee agree, by execution and delivery hereof, to execute
and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be
effective as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner
Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture
Trustee, by execution and delivery hereof, agree that, with effect from and
including the Restatement Date and except as otherwise provided in Section 15
hereof, the Participation Agreement shall terminate and forever be without
force and effect, conferring no rights and imposing no 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 terminate as and to the extent set forth herein
and therein. Lease Amendment No. 1 shall be effective as of the Restatement
Date.
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<PAGE> 23
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original
Head Lessee (except as to the representation and warranty contained in Section
8(i)), the Parent Guarantor (except as to the representation and warranty
contained in Section 8(i)), the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease,
the Pass Through Trust Agreements, the Amended and Restated Sublease
TIA, the SLV Letter Agreement and any certificate delivered by the
Lessee pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction
where the failure to so qualify would have a material adverse effect
on its business, operations or condition (financial or otherwise), or
on its ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under, or result in the creation of any
Lien (other than Permitted Liens) upon the property of the Lessee
under, any indenture, mortgage, contract, lease or other agreement in
each case having payment obligations in excess of $500,000 to which
the Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the
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<PAGE> 24
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 Amended and Restated Lease, Lease
Supplement No. 3, Trust Supplement No. 2, the First Amended and
Restated Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the FAA, the
filing of a Uniform Commercial Code ("UCC") amended financing
statement with the Secretary of State of the State of Delaware with
regard to the Original Lease, the filing of UCC termination statements
with regard to the Original Head Lessee with the Secretary of State of
the States of New York, Connecticut and Arizona, the filing of a
protective UCC financing statement with the Secretary of State of the
State of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State of
Arizona with respect to the Sublease, and the filing of a UCC
termination statement with the Secretary of State of the State of
Delaware with respect to the Initial Sublease Assignment (as defined
in the Original Lease) all of which financing and termination
statements shall have been duly effected as of the Restatement Date
(and assignments thereof and continuation statements at periodic
intervals), and other than the taking of possession by the Indenture
Trustee of the original counterparts of the Original Lease, Lease
Amendment No. 1, the Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes chattel
paper), and the placing of the Lease identification required by
Section 6(e) of the Lease, no further filing or recording of the Lease
or of any other document (including any financing statement under
Article 9 of the UCC of the State of Delaware, New York or Arizona)
and no further action is necessary, under the laws of the United
States of America or the States of Delaware, New York and Arizona in
order to perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the security
interest in favor of the Indenture Trustee in the Owner Trustee's
interest in the Aircraft and in the Lease;
(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;
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<PAGE> 26
(k) no event has occurred and is continuing which constitutes
a Lease Event of Default or would constitute a Lease Event of Default
but for the requirement that notice be given or time lapse or both;
(l) no event has occurred and is continuing which constitutes
an Event of Loss (as defined in the Lease) or would constitute an
Event of Loss with the lapse of time;
(m) the Lessee has filed or will file, or has caused or will
cause to be filed, all federal and state tax returns which are
required to be filed and has paid or will pay or has caused or will
cause to be paid all taxes shown to be due or payable on said returns
and on any assessment received by the Lessee, to the extent such taxes
have become due and payable, except for taxes and returns with respect
thereto the nonpayment or nonfiling of which, either in any case or in
the aggregate, could have no material adverse effect on the Lessee,
its condition (financial or otherwise), business, operations or
prospects, or on its ability to perform its obligations under the
Lease or which are being diligently contested by the Lessee in good
faith by appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of December 31, 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) and do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading; since December 31, 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 or the non- payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated foreign
country within the meaning of the Foreign Assets Control Regulations
or the Cuban Assets Control Regulations
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<PAGE> 27
of the United States Treasury Department, 31 Code of Federal
Regulations, Subtitle B, Chapter V, as amended, or of any regulations,
interpretations or rulings issued thereunder, and the Lessee is not,
and is not acting on behalf of or for the benefit of, an "Iranian
Entity" within the meaning of the Iranian Assets Control Regulations
of the United States Treasury Department, 31 Code of Federal
Regulations, Subtitle B, Chapter V, as amended, and the transactions
contemplated by this Agreement are not prohibited by Executive Order
12170, the above-mentioned Iranian Assets Control Regulations or any
regulations, interpretations or rulings issued under any thereof;
(q) no part of the Rent or other payments made by the Lessee
under the Lease or under the other Operative Documents will be made
out of the assets of any "employee benefit plan" as defined in Section
3(3) of ERISA;
(r) no representation or warranty of the Lessee contained in
any Lessee Document or other information in writing furnished to the
Owner Participant or the Indenture Trustee by the Lessee in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading; there is no fact known to
the Lessee (other than matters of a general economic nature) which the
Lessee has not disclosed in writing to the Owner Participant or the
Indenture Trustee which could impair its ability to perform its
obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the
Bankruptcy Code, the Lessor as lessor of the Aircraft under the Lease,
and the Indenture Trustee, as assignee of the Owner Trustee's rights
under the Lease pursuant to the Indenture, would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
Aircraft.
SECTION 9. Representations and Warranties. Each of the
parties below represents and warrants, as of the Restatement Date, to each of
the other parties to this Agreement and to the Liquidity Provider (except that
the representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a corporation duly
organized, validly existing and in good standing under the
laws of the State of New York, is a "citizen of the United
States" as defined in Section 40102(a)(15) of
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the Federal Aviation Act and the rules and regulations of the
FAA thereunder (as so defined, a "Citizen of the United
States") (without making use of a voting trust, voting powers
agreement or similar arrangement), will notify promptly all
parties to this Agreement if in its reasonable opinion its
status as a Citizen of the United States (without making use
of a voting trust, voting powers agreement or similar
arrangement) is likely to change and will resign as Indenture
Trustee as provided in Section 8.02 of the Indenture promptly
after it obtains actual knowledge that it has ceased to be
such a Citizen of the United States (without making use of a
voting trust, voting powers agreement or similar arrangement),
and has the full corporate power, authority and legal right
under the laws of the State of New York and the federal laws
of the United States pertaining to its banking, trust and
fiduciary powers to execute and deliver each of this
Agreement, the Indenture and each other Operative Document to
which it is a party and to carry out its obligations under
this Agreement, the Indenture and each other Operative
Document to which it is a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it
is bound, or contravenes or will contravene any law,
governmental rule or regulation or any judgment or order
applicable to or binding on it of any United States
governmental authority or agency governing the trust powers of
the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms,
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except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would materially adversely affect
the ability of the Indenture Trustee, in its individual
capacity or as Indenture Trustee, as the case may be, to
perform its obligations under the Operative Documents to which
it is a party;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of New York or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease Amendment No. 1
or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has
been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(7) it has possession of the chattel paper original
counterpart of the Original Lease, Lease Amendment No. 1 and
the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (4)(i) and (6) below, which representations and
warranties are made solely by the Owner Trustee) and the Owner Trustee
(except with respect to clauses 1(i), (2)(i), 4(ii), (7), (11) and
(12) below, which representations and warranties are made solely by
the Trust Company) represents and warrants that:
(1) (i) 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
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<PAGE> 30
to execute and deliver Trust Supplement No. 2, has the
corporate power and authority to carry out the terms of the
Trust Agreement, and (ii) 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) the Trust Company has duly authorized,
executed and delivered the Trust Agreement (and, to the extent
provided herein to be in its individual capacity, this
Agreement) and (assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant)
the Trust Agreement (and, to the extent provided herein to be
in its individual capacity, this Agreement) constitutes a
legal, valid and binding obligation of the Trust Company,
enforceable against it in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity, (ii) the Owner Trustee has duly authorized, executed
and delivered this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant) this Agreement and the Trust
Agreement constitute, and the Indenture and the Lease, when
entered into, will constitute, legal, valid and binding
obligations of the Owner Trustee, 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, upon such issuance, execution and delivery by
the Owner Trustee and authentication by the Indenture Trustee
in accordance with the terms of the Indenture, each Equipment
Note issued on the Restatement Date will
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<PAGE> 31
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) (i) neither the execution and delivery by the
Owner Trustee 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
or thereof, contravenes or will contravene any judgment or
order applicable to or binding on it, and (ii) neither the
execution and delivery by the Trust Company 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 or 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 law, governmental rule or regulation of the
State of Delaware or any United States governmental authority
or agency governing the trust powers of the Trust Company, 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, State of New
York 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);
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<PAGE> 32
(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;
(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;
(11) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangements); and
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<PAGE> 33
(12) there has not occurred any event which
constitutes (or to the best of its knowledge would, with the
passage of time or the giving of notice or both, constitute)
an Event of Default as defined in the Indenture which has been
caused by or relates to the Trust Company and which is
presently continuing.
(c) The Owner Participant represents and warrants that:
(1) it is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization, has the partnership 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 partnership power and
authority to enter into and to perform its obligations under
this Agreement, the Trust Agreement, the SLV Letter Agreement
and the Amended and Restated Head Lease TIA; this Agreement,
the SLV Letter Agreement and Trust Supplement No. 2 have been
duly authorized, executed and delivered by it; assuming the
due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, this Agreement, the
Trust Agreement, the SLV Letter Agreement and the Amended and
Restated Head Lease TIA constitute the legal, valid and
binding obligations of the Owner Participant enforceable
against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity; and the Managing Partner 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 execute and deliver this Agreement, the
Trust Agreement, the SLV Letter Agreement and the Amended and
Restated Head Lease TIA on behalf of the Owner Participant;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
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<PAGE> 34
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, the
Partnership Agreement or any indenture, mortgage, contract or
other agreement or instrument to which the Owner Participant
is a party or by which it or any of its property may be bound
or affected, except where such contravention or default would
not result in any liability to any other party hereto or have
a material adverse effect on the rights or on the remedies of
the other parties hereto or on its ability to perform its
obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the citizenship
requirements of the Owner Participant under the Federal
Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant or any of its partners before any court or
administrative agency or arbitrator which, if determined
adversely to the Owner Participant or such partner(s), would
materially adversely affect the Owner Participant's ability to
perform its obligations under this Agreement, the Trust
Agreement, the SLV Letter Agreement or the Amended and
Restated Head Lease TIA;
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant and its partners (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens); and
(6) each of its partners is a Citizen of the United
States (without making use of a voting trust
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<PAGE> 35
agreement, voting powers agreement or similar arrangement).
If at any time the Owner Participant or any partner of the
Owner Participant has ceased to be, or the Owner Participant
shall have actual knowledge that the Owner Participant or any
partner of the Owner Participant is likely to cease to be,
such a citizen, and (i) the Aircraft shall be or would
thereupon become ineligible for registration in the name of
Owner Trustee under the Federal Aviation Act as in effect at
such time (without regard to the "based and primarily used"
provisions thereof) and the regulations then applicable
thereunder, or (ii) the Aircraft is registered in a
jurisdiction other than the United States of America, in
circumstances in which the preceding clause (i) does not apply
and the Lessee or any Permitted Sublessee at any time proposes
to register the Aircraft in the United States of America, then
Owner Participant shall (at its own expense and without any
reimbursement or indemnification from the Lessee or any
Permitted Sublessee) (A) immediately either (1) transfer in
accordance with Section 10 hereof all of its right, title and
interest in and to the Trust Agreement, the Trust Estate, this
Agreement and the Amended and Restated Head Lease TIA or (2)
take such other action, including, without limitation, the
establishment of a voting trust or voting powers agreement (in
which case Owner Participant shall remain the beneficial owner
of the Trust Estate), as may be necessary to prevent the
deregistration of the Aircraft under the Federal Aviation Act
or to maintain such registration of the Aircraft or to make
possible such registration of the Aircraft in the United
States of America and to prevent Indenture Trustee, the
Holders of the Equipment Notes, the Lessee or any Permitted
Sublessee from being adversely affected as a result thereof
and (B) indemnify the Lessee, the Indenture Trustee, the
Holders of the Equipment Notes and any Permitted Sublessee,
from and against any and all Claims incurred or suffered as a
result of such partner's or partners' 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,
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<PAGE> 36
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 nor contravenes or results
in any breach of, or constitutes 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;
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<PAGE> 37
(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 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
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<PAGE> 38
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 Underwriter
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
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 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;
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<PAGE> 39
(3) none of the execution, delivery and performance
by the Subordination Agent of any 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
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
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<PAGE> 40
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 Underwriter
or the Lessee.
(f) The Original Head Lessee represents and warrants that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
Documents"); each Original Head Lessee Transaction Document
has been duly authorized, and upon the execution and delivery
thereof will constitute, the legal, valid and binding
obligations of the Original Head Lessee enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
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<PAGE> 41
(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 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 (including, without limitation, the
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<PAGE> 42
rights of the parties to and under the Foreign Financing
Documents);
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation Agreement.
As of the Restatement Date, there are no existing Claims
against Parent Guarantor or Original Head Lessee with respect
to Buyer Furnished Equipment; and
(8)except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
confidential financial terms redacted) of Lease Amendment No.
1, the Amended and Restated Lease, Lease Supplement No. 2,
Trust Supplement No. 2, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Amended and Restated Lease, and all Lease
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the
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<PAGE> 43
Indenture Trustee in the Owner Trustee's interest in the
Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
(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;
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<PAGE> 44
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with respect to Section 9(f)(8)
shall be only for the benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not (i) 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 (ii) sell, transfer or otherwise dispose of (in one or
more related transactions) all or more than 75% of its property or assets
(based on the book value of such property and assets) unless such sale,
transfer or other disposition is made at the end of the lease term for any such
property or assets; provided that, subject to the conditions set forth below,
(1) 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 and (2) Owner Participant may
sell, transfer or otherwise dispose of all or substantially all of its property
or assets in a manner that would otherwise be prohibited by clause (ii) above
if, prior to any such sale, transfer or other disposition, Owner Participant
transfers 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; and provided further, that, so long as [________] shall
be the Owner Participant hereunder, nothing in this Section 10 shall restrict
the right of any partner of [________] to sell, assign, convey or otherwise
transfer any of its right, title or interest in [_________]. 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
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<PAGE> 45
financial institution with a combined capital, surplus and undivided
profits of, or a corporation with a tangible net worth of, in either
case at least $60,000,000, (B) any partnership in which such bank,
trust company, financial institution, or corporation (or a direct or
indirect subsidiary of such bank, trust company, financial institution
or corporation) is a general partner 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, trust company, financial institution or
corporation guaranteeing such partnership'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, (C) any direct or indirect 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, trust company, 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 (D) an Affiliate or a subsidiary of Owner
Participant if Owner Participant furnishes to Owner Trustee, Indenture
Trustee, Original Head Lessee and Lessee an agreement whereby Owner
Participant will guarantee such Affiliate's or subsidiary's
obligations as Owner Participant contained in this Agreement, the
Trust Agreement, the 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 (vii) below; provided
that if such Transferee is an Affiliate or 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 guarantee and
otherwise meets the requirements of this Section 10;
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<PAGE> 46
(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 such 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 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 any
thereof or other similar Person;
(viii) 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), (C) or (D) above, if any, is the legal,
valid, binding and enforceable obligation of the Transferee's
guarantor shall be provided, at least 3 days prior to such transfer,
to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee,
which shall be in form and substance reasonably satisfactory to each
of them; and
(x) the terms of the Operative Documents and the Amended
and Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to
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<PAGE> 47
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 Trust Agreement, 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 Trust Agreement or the Amended and Restated Head Lease TIA by or against
Owner Participant which have accrued or been made prior to the date of such
transfer. The transferor Owner Participant shall pay the reasonable expenses
of each party hereto related to any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions
of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's eligibility for registration
by restricting the use of the Aircraft.
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any 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
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<PAGE> 48
Participant to the effect of the following and as to such other matters as the
Owner Participant may reasonably request:
(A) the Owner Trustee's ownership interest in the
Aircraft and interest in the Lease and any Permitted Sublease shall be
recognized under the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and
remedies of the Owner Trustee, under the Lease shall remain valid,
binding and (subject to customary bankruptcy and equitable remedies
exceptions and to other exceptions customary in foreign opinions
generally) enforceable under the laws of such jurisdiction (or the
laws of the jurisdiction to which the laws of such jurisdiction would
refer as the applicable governing law),
(C) after giving effect to such change in registration,
the Lien of the Indenture on the Owner Trustee's right, title and
interest in and to the Aircraft, the Lease and any Permitted Sublease
shall continue as a valid and duly perfected security interest (and
will not adversely affect the validity of the opinions stated in
paragraphs 5(a) and 5(c) of the opinion letter delivered by
Freshfields on the Restatement Date in connection with the
transactions contemplated by this Agreement) and all filing, recording
or other action necessary to protect the same and the Owner Trustee's
ownership interest in the Aircraft shall have been accomplished (or,
if such opinion cannot be given at the time of such proposed change in
registration because such change in registration is not yet effective,
(1) the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall
have received a certificate from Lessee that all possible preparations
to accomplish such filing, recording and other action shall have been
done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be
delivered to 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
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<PAGE> 49
reasonably satisfactory to the Owner Participant is provided to cover
such risk),
(F) (unless Lessee shall have agreed, or pursuant to the
Lease shall have been required, to provide insurance covering the risk
of requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the
Lease, (ii) the aircraft maintenance standards of the new country of registry
shall be not materially less stringent from those of the United States of
America or not materially less stringent from those of the United Kingdom and
the Owner Trustee and the Indenture Trustee shall have received a certificate
to such effect signed by the President, any Executive Vice President or any
Senior Vice President of Lessee which certificate shall, as among the parties
hereto, be presumed to be correct as to the matters stated therein absent
conclusive evidence to the contrary and (iii) such re-registration shall not be
in conflict with, and all action shall be taken as may be required by the terms
of, Section [__] and [__] of the Foreign Lease Agreement [other agreements] in
connection with such change in registration. Lessee shall pay all reasonable
costs, expenses, fees, and recording and registration taxes, including the
reasonable fees and expenses of counsel to the Owner Trustee, the Owner
Participant and the Indenture Trustee and of counsel delivering any opinions
required pursuant to Section [__] and [__] of the Foreign Lease Agreement
[other agreements], and other charges in connection with any such change in
registration.
At any time during the Term of the Lease, the Owner Trustee,
the Indenture Trustee and the Owner Participant shall, subject to the terms and
conditions hereof, at the request and sole expense of the Lessee (1) cooperate
with Lessee in effecting a change in registration of the Aircraft pursuant to
this Section 11 and, in connection therewith, execute such documents and
instruments as may be reasonably requested by Lessee and (2) cooperate with the
Lessee to comply with all the terms of Section 15.02(b) of the Foreign Lease
Agreement. Except as provided in this Section 11, the Owner Trustee shall not
cause any change in the registration of the Aircraft pursuant to Section
15.02(b) of the Foreign Lease Agreement during the Term of the Lease. Anything
herein or in any other Operative Document to the
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<PAGE> 50
contrary notwithstanding, at no time during the term of the Foreign Lease
Agreement shall the Lessee register, or permit any Permitted Sublessee to
register, the Aircraft in Hong Kong or, after Hong Kong becomes a part of the
People's Republic of China, the People's Republic of China.
SECTION 12. Quiet Enjoyment. Each of the Trust Company,
Owner Trustee, Owner Participant (as to itself and as to Owner Trustee),
Indenture Trustee in its individual capacity and as Indenture Trustee and on
behalf of the Note Holders, the Pass Through Trustee and the Subordination
Agent severally covenants and agrees that during the Term, so long as no Lease
Event of Default shall have occurred and be continuing and the Lease shall not
have been declared or deemed in default, no action shall be taken or caused to
be taken by it or a Person lawfully claiming by, through or on behalf of it to
interfere with the right of Lessee or any Permitted Sublessee to the
possession, use, operation and quiet enjoyment of and other rights with respect
to the Aircraft under the Lease, and all rents, revenues, profits and income
therefrom, in accordance with the terms of the Lease; provided that the Trust
Company, Owner Trustee and Owner Participant shall not be liable for any such
interference by Indenture Trustee, Pass Through Trustee, holders of any
Equipment Notes, or any other Person lawfully claiming by, through or on behalf
of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and
each Indemnitee against any claims incurred or suffered by any such Person and
any reduction in amounts payable out of, or diminution in the assets of, the
Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or
Head Lessor's Lien attributable to it. For all purposes of this Agreement and
the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising
as a result of the nonpayment of any Tax imposed on or measured by the net
income of the Trust Estate or the trust created by the Trust Agreement that is
not indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
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<PAGE> 51
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, (iii) Taxes imposed on or Claims against such Person which are
excluded from indemnification by Lessee, or (iv) Claims against such Person
arising out of the voluntary or involuntary transfer by such Person of all or
any portion of its interest in the Aircraft, the Airframe, any Engine, the
Trust Estate, the Trust Indenture Estate or the Operative Documents (except a
Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that it will promptly, at its own expense (and without any
right of indemnification or reimbursement from Lessee), take such action
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<PAGE> 52
as may be necessary duly to discharge any such Sublessor's Lien attributable to
it or other Lien or disposition of title created by or through Original Head
Lessee, Parent Guarantor or any Affiliate of either thereof which would have
constituted a Sublessor's Lien had the Sublease remained in effect and to make
restitution to the Trust Estate and the Indenture Estate for any diminution of
the assets thereof resulting therefrom and will indemnify and hold harmless
Lessee and each Indemnitee against any claims incurred or suffered by any such
Person and any reduction in amounts payable out of, or diminution in the assets
of, the Trust Estate or the Indenture Estate resulting from any such
Sublessor's Lien attributable to it or other Lien or disposition of title
created by or through Original Head Lessee, Parent Guarantor or any Affiliate
of either thereof which would have constituted a Sublessor's Lien had the
Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien
or disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to
Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees
with Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee or
the Lien of the Indenture, and (iii) not to terminate or revoke the Trust
Agreement except in accordance with the terms thereof, provided that any such
termination or revocation shall not adversely affect the Lessee or the Lien of
the Indenture.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall not consent to or direct a change
in the situs of the Trust Estate so long as a successor Owner Trustee meeting
the requirements of the Trust Agreement is reasonably available at the present
situs of the Trust Estate (A) unless the Indenture Trustee, the Original Head
Lessee and Lessee shall have been
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given 30 days' prior notice thereof and (B) if, within 15 days after notice of
such a proposed change is given to Lessee and the Original Head Lessee, either
(1) Lessee or Original Head Lessee delivers to Owner Participant and Owner
Trustee (at the expense of Owner Participant) an opinion of counsel, which
counsel shall be reasonably satisfactory to Owner Participant and Owner
Trustee, to the effect that such proposed change in the situs of the Trust
Estate would have an adverse effect on the rights or obligations of Lessee or
Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner
Participant and Owner Trustee (at the expense of Owner Participant) an opinion
of counsel, which counsel shall be reasonably satisfactory to Owner Participant
and Owner Trustee, to the effect that such proposed change in the situs of the
Trust Estate would cause an increase in the amount for which Lessee may be
required to indemnify any Person pursuant to the provisions of Section 10 of
the Lease or for which Original Head Lessee is required to indemnify any Person
pursuant to the provisions of the Amended and Restated Head Lease TIA, unless
any and all Persons entitled to indemnification pursuant to Section 10 of the
Lease or applicable provision of the Amended and Restated Head Lease TIA shall
waive indemnification under Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA for any adverse tax or other
consequences to it of such a change in the situs of the Trust Estate, (C)
unless Indenture Trustee receives from Owner Participant an opinion of counsel,
which counsel shall be reasonably satisfactory to Indenture Trustee, to the
effect that such proposed change in the situs of the Trust Estate would not
have an adverse effect on the validity or priority of the Lien of the Indenture
and that such Uniform Commercial Code and FAA filings as are required to
maintain the validity and priority of the Lien of Indenture have been made, and
(D) such change does not affect the registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to
any Taxes for which it is indemnified pursuant to Section 10 of the Lease and
if, as a consequence thereof, Lessee should request that the situs of the trust
be moved to another state in the United States of America from the state in
which it is then located, the situs of the trust shall be moved and Owner
Participant will take whatever action may be requested by Lessee that is
reasonably necessary to accomplish such removal; provided that (A) Lessee shall
provide such additional tax indemnification with respect to such change of
situs and request of Lessee as Original Head Lessee, Owner Participant or the
Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the
Lease and the exclusions in the Amended and Restated Head Lease TIA) may
reasonably request, (B) promptly after notice thereof Owner Participant has not
notified Lessee 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 satisfac-
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tory to Indenture Trustee, to the effect that the validity and priority of the
Lien of the Indenture will not be adversely affected by such action, and that
such Uniform Commercial Code and FAA filings as are required to maintain the
validity and the priority of the Lien of the Indenture have been made, (D)
Owner Participant and Indenture Trustee shall have received an opinion or
opinions of counsel selected by Owner Participant to the effect that, with
customary exceptions, (I) the trust, as thus removed, shall remain a validly
established trust, (II) any amendments to the Trust Agreement or the Indenture
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the legal, valid and
binding obligations of such parties, enforceable in accordance with their
terms, (III) if such removal involves the replacement of Owner Trustee, an
opinion of counsel to such successor Owner Trustee in form and substance
reasonably satisfactory to Indenture Trustee and to Owner Participant covering
the matters described in the opinion described in Section 3(j) hereof, and (IV)
covering such other matters as Owner Participant or the Indenture Trustee may
reasonably request, and (E) Lessee shall indemnify and hold harmless on an
after tax basis Owner Trustee, Owner Participant and their respective
Affiliates and Indenture Trustee against any and all reasonable and actual
costs and expenses including reasonable attorneys' fees and disbursements,
registration, recording or filing fees and other Taxes incurred by Owner
Trustee, Owner Participant and their respective Affiliates, or Indenture
Trustee in connection with such change of situs and shall indemnify and hold
harmless Owner Participant, Owner Trustee and their respective Affiliates, and
Indenture Trustee on an after tax basis (subject to the exclusions set forth in
Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and
against any increase in Taxes borne by such Person that results from such
change in situs. In no event shall any change in situs of the trust affect
Original Head Lessee's rights or obligations under the Amended and Restated
Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed
by Owner Participant, a successor Owner Trustee may be appointed, and a
corporation may become Owner Trustee under the Trust Agreement, only in
accordance with the provisions of Article X of the Trust Agreement. Owner
Participant agrees promptly to appoint a successor Owner Trustee in the event
that Owner Participant has actual knowledge that Owner Trustee is not in
compliance with its covenants contained herein. No successor Owner Trustee
shall be appointed unless Lessee and Indenture Trustee shall have given written
consent thereto, which consent 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
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hereby. Lessee shall pay expenses on an after tax basis relating to the
resignation or, if requested by Lessee, the removal of Owner Trustee, provided
that the Owner Participant shall pay expenses relating to the removal of the
Owner Trustee, if such removal was solely at the request of the Owner
Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment
of the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
(f) The Owner Participant hereby instructs the other parties
hereto to deal directly with the Managing Partner as managing partner of the
Owner Participant and the Owner Participant agrees that the other parties
hereto will be entitled to rely conclusively on any consent, waiver, approval
or other action taken by the Managing Partner as managing partner of the Owner
Participant.
(g) The Parent Guarantor hereby agrees, for the benefit of
the Indenture Trustee, that in the event any Termination Sum and/or
Supplemental Residual Value (as such terms are defined in the Foreign Lease
Agreement) not payable by the Security Agent under its Payment Assumption
Agreement (as such terms are defined in the Foreign Lease Agreement) but
covered by that certain Non-transferable and Irrevocable Stand-by Letter of
Credit No. G90/44 (as at any time amended or otherwise modified or replaced,
the "Letter of Credit") issued by Swiss Bank Corporation or any replacement
letter of credit issuer ("Issuing Bank") in favor of the Foreign Lessor shall
at any time become due and payable under the Foreign Lease Agreement to Foreign
Lessor, then the Parent Guarantor shall cause the same to be duly paid to the
Foreign Lessor by directing GPAG Caymans to instruct the Foreign Lessor to
satisfy such payment obligation by making a drawing therefor under the Letter
of Credit in accordance with the terms thereof. Each of the Parent Guarantor
and the Indenture Trustee agree not to amend the provisions of this Section
14(g) without the prior written consent of the Rating Agencies (as defined in
the Intercreditor Agreement).
SECTION 15. Certain Retained Rights and Releases. (a) Each
of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees
and consents to and confirms that it is bound by the terminations, assignments,
delegations, releases and amendments set forth in or contemplated by Lease
Amendment No. 1 and the Amended and Restated Lease.
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<PAGE> 56
(b) Each of Parent Guarantor, Original Head Lessee and Lessee
agree as among themselves that the following rights, benefits, obligations and
liabilities (such rights, benefits, obligations and liabilities are,
collectively, the "Retained Sublease Rights and Obligations"), shall survive
the termination of the Sublease and the Sublease Guaranty: (i) Lessee,
Original Head Lessee and Parent Guarantor shall retain all rights, benefits,
obligations and liabilities under the Sublease, including that Sublessee shall
remain liable for all of its obligations under Sections 10 and 13 of the
Sublease, with respect to the period up to (but excluding) the Restatement Date
and each of Parent Guarantor, Original Head Lessee and Lessee shall retain all
rights and liabilities under any provision of the Sublease which by the express
terms thereof survives the termination or expiration thereof (including,
without limitation, any such liability arising from and including the
Restatement Date under the Sublease in respect of the period up to (but
excluding), or acts or omissions or circumstances arising prior to (but
excluding), the Restatement Date), (ii) all rights, benefits, obligations and
liabilities under the Sublease TIA (which rights, benefits, obligations and
liabilities are amended and restated as of the Restatement Date) and (iii)
Original Head Lessee and Parent Guarantor shall remain liable to Sublessee
under the Sublease and the Sublease Guaranty for Sublessor's Liens (as therein
defined); all of which rights, benefits, obligations and liabilities shall
expressly survive the termination of the Sublease and the Sublease Guaranty.
In furtherance of the foregoing, it is agreed that (x) Original Head Lessee
shall continue to be liable to the Sublessee as and to the extent provided
hereunder for removal of Sublessor's Liens and (y) Parent Guarantor is hereby
released from any and all obligations and liabilities under the Sublease
Guaranty, other than in respect of the obligations and liabilities of the
Original Head Lessee in respect of Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner
Participant agree as among themselves that the following rights, benefits,
obligations and liabilities shall survive the termination of the Sublease:
Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as
such term is defined in the Sublease) other than Original Head Lessee and
Parent Guarantor, shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable
for all of its obligations under Sections 10 and 13 of the Sublease, with
respect to the period up to (but excluding) the Restatement Date and each of
Lessee, Owner Trustee and Owner Participant shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising on or after the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), all of
which rights, benefits,
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obligations and liabilities shall expressly survive the termination of the
Sublease. In furtherance of the foregoing, it is agreed by Sublessee that the
indemnities contained in Sections 10 and 13 of the Sublease are expressly made
for the benefit of and shall be enforceable by each Indemnitee (as such term is
defined in the Sublease).
(d) Except with respect to the Sublease and the Sublease
TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to (but excluding) the
Restatement Date and excluding the Head Lease TIA (which rights, benefits,
obligations and liabilities are amended and restated as of the Restatement
Date)) and are released from all such obligations and liabilities, except the
Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease
Guaranty (i) shall continue to be liable to the parties hereto for the removal
of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in
the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the
Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving
rights, benefits, obligations and liabilities of Parent Guarantor and Original
Head Lessee, are, collectively, the "Retained Head Lease Rights and
Obligations"). In furtherance of the foregoing, the parties hereto consent and
agree that the Parent Guarantor is hereby released from any and all
"Obligations" under and as defined in the Parent Head Lease Guaranty, except in
respect of the Retained Head Lease Rights and Obligations and except in respect
of the Amended and Restated Head Lease TIA, the "Obligations" in respect of
which shall continue in full force and effect in accordance 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 and the
Lessee that it shall (so
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long as 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 Foreign Financing Documents 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 Foreign Lease Assignment, the Hire Purchase Agreement
and the Foreign Power of Attorney 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, and not knowingly take any affirmative action that is in
violation of any provisions (whether or not the Owner Trustee is bound
by such provisions) of such Foreign Financing Documents or this
Section 15(e), (B) observe and fulfill, to the best of its ability,
all conditions to be fulfilled by it pursuant to any of the Foreign
Financing Documents in order to exercise rights under such documents
which are vested in it, and (C) except as provided in paragraphs (iv)
and (vii) below and in Section 15(f), not exercise any discretionary
actions under or with respect to the Foreign Financing Documents
except solely at the written direction or with written consent of the
Original Head Lessee 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 Foreign Financing Documents or consent to any such
amendment, supplement, modification or waiver, or grant any consent
requested under any provision thereof, in any such case without the
prior written consent of the Original Head Lessee, the Parent
Guarantor, the Owner Participant, and (so long as the Lien of the
Indenture shall not have been discharged) the Indenture Trustee and,
if any obligation of the Lessee would be increased thereby or any
right of the Lessee decreased 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 Foreign Financing Documents and copies of all amendments,
supplements and modifications entered into from time to time to any
Foreign Financing Documents to which it is or is made a party (or
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under which it possesses rights) unless such persons shall have
received such material from another source;
(iv) carry out the sale of the Aircraft contemplated by
Section 2.03 of the Foreign Lease Agreement and the Foreign Power of
Attorney upon any termination of the Foreign Lease Agreement, it being
understood that the Owner Trustee is to sell the Aircraft to itself,
as permitted by the Foreign Lease Agreement, to offset its right to a
rebate of all but US $1,300 of the sale proceeds against the
obligation to remit such sale proceeds to the Foreign Lessor, and to
give notice to the Escrow Agent under the Escrow Agreement to deliver
the conveyance documents to and in the name of the Owner Trustee;
(v) exercise the rights of termination provided for in
Sections 2.02(a) and 21.01 of the Foreign Lease Agreement, effective
as of any time when such rights of termination are exercisable under
said Sections 2.02(a) and 21.01 at the direction of the Original Head
Lessee, except during such time as an Event of Default under the Lease
shall have occurred and be continuing;
(vi) exercise the right of termination provided for in
Section 17.02(a) of the Foreign Lease Agreement upon the occurrence of
a Casualty Occurrence (as defined therein), at the direction of
Original Head Lessee, except during such time as an Event of Default
under the Lease shall have occurred and be continuing;
(vii) exercise the right of termination provided for in
Section 2.02(b) of the Foreign Lease Agreement at the direction of the
Indenture Trustee so long as the Lien of the Indenture shall not have
been discharged and thereafter by the Owner Trustee;
(viii) exercise the right to terminate the Hire Purchase
Agreement, at the direction of the Original Head Lessee, except during
such time as an Event of Default under the Lease shall have occurred
and be continuing; and
(ix) not exercise any right to terminate or revoke any
Foreign Financing Document, except as provided in this Section 15.
(f) 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 Foreign Lessor with respect to any of its
representations, warranties and covenants under the Foreign Lease Agreement or
any of the other Foreign Financing Documents may be enforced by the Original
Head Lessee on behalf of the Owner Trustee or the Indenture Trustee, directly
by the Original Head Lessee in its
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own name or in the name of the Owner Trustee or the Indenture Trustee; provided
that if such rights or claims are exercised by the Owner Trustee or the
Indenture Trustee (i) the Original Head Lessee 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 (ii) 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.
(g) The Indenture Trustee shall not exercise any of the Owner
Trustee's rights under the Foreign 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.
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 (the provisions of which are hereby
incorporated herein) 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 pro-
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ceeding 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 c/o GPA Corporation at 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 c/o Security Pacific Leasing Corporation at 555 California
Street, San Francisco, California 94104 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, 15th Floor,
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
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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, the 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, 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 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) Kelley Drye &
Warren LLP, special counsel for the Indenture Trustee, (B) Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee and the
Subordination Agent, (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 Underwriter;
(2) the reasonable fees, expenses and disbursements of White
& Case, special counsel for the Owner Participant;
(3) the reasonable fees, expenses and disbursements of
Andrews & Kurth L.L.P. and Latham & Watkins, special counsel for the
Lessee;
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(4) underwriting fees and commissions;
(5) the initial fees and expenses of the Liquidity Provider,
the Pass Through Trustee, the Indenture Trustee, the Owner Trustee and
the Subordination Agent;
(6) the costs of filing and recording documents with the FAA
and filing Uniform Commercial Code financing statements in the United
States of America; and
(7) the reasonable fees, expenses and disbursements of White
& Case, special counsel for the Liquidity Provider.
(b) In the event that the transactions contemplated by this
Section 21 and the agreements referred to herein are not consummated, the
Original Head Lessee shall bear and pay all costs, expenses and fees referred
to in this Section 21.
(c) The Lessee agrees to pay the amounts it is obligated to
pay under Section 21(j) of the Lease.
SECTION 22. Reliance of Liquidity Provider. Each of the
parties hereto agrees and acknowledges that the Liquidity Provider shall be a
third party beneficiary of each of the representations and warranties made
herein by such party, and that the Liquidity Provider may rely on such
representations and warranties to the same extent as if such representations
and warranties were made to the Liquidity Provider directly. The terms of this
Agreement shall inure to the benefit of the Liquidity Provider, its successors
and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the
transactions contemplated hereby have been consummated, and except as otherwise
provided for herein, the representations and warranties herein of the Original
Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture
Trustee, the Owner Participant, the Subordination Agent and the Pass Through
Trustee shall survive the execution and delivery of this 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
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upon, and shall inure to the benefit of, the Original Head Lessee and its
successors and permitted assigns, the Parent Guarantor and its successors and
permitted assigns, the Lessee and its successors and permitted assigns, the
Pass Through Trustee and its successors as Pass Through Trustee (and any
additional trustee appointed) under any of the Pass Through Trust Agreements,
the Indenture Trustee and its successors as Indenture Trustee (and any
additional Indenture Trustee appointed) under the Indenture, the Subordination
Agent and its successors as Subordination Agent under the Intercreditor
Agreement, the Owner Trustee and its successors as Owner Trustee under the
Trust Agreement, and the Owner Participant and its successors and permitted
assigns. No purchaser or holder of any Equipment Notes shall be deemed to be a
successor or assign of any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that
the consent of Indenture Trustee be obtained or that the Indenture Trustee be
given notice shall be of no further force and effect.
(c) The Lessee agrees for the express benefit of the
Indenture Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the Lessee
that the Lessee can rely on the options, elections, determinations, consents,
approvals, waivers and notices given, exercised or made by the Owner Trustee
under the Lease to the extent reserved to the Owner Trustee pursuant to Section
5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any Operative
Document, the parties hereto hereby agree that the Put Termination Agreement
and the Deed of Indemnity (as such terms are defined herein) shall not
constitute Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that
this Agreement shall be effective among all such parties on and as of the
Restatement Date.
- 61 -
<PAGE> 65
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.
AMERICA WEST AIRLINES, INC.
By:
--------------------------------------
Name: Jacques C. Lazard
Title: Vice President/Treasurer
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
<PAGE> 66
WILMINGTON TRUST COMPANY, not in its individual
capacity, except as expressly provided herein, but
solely as Owner Trustee
By:
--------------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust Administration
[___________]
By:
--------------------------------------
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
<PAGE> 67
THE CHASE MANHATTAN BANK, not in its individual
capacity, except as otherwise provided herein, but
solely as Indenture Trustee
By:
--------------------------------------
Name: Andrew M. Deck
Title: Vice President
Address: 450 West 33rd Street
15th Floor
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: Philip G. Kane, Jr.
Title: Vice President
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: Philip G. Kane, Jr.
Title: Vice President
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut 06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust Administration
<PAGE> 68
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1A, dated June ___, 1997.
2. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1B, dated June ___, 1997
3. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1C, dated June ___, 1997.
4. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1D, dated June ___, 1997.
<PAGE> 69
SCHEDULE II to
Refunding Agreement
EQUIPMENT NOTES, PASS THROUGH TRUSTS AND PURCHASE PRICE
<TABLE>
<S> <C> <C> <C>
Interest Rate Principal Purchase
Pass Through Trusts and Maturity Amount Price
- ------------------- ------------ ------ -----
</TABLE>
<PAGE> 70
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip
Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet
National Bank Account No. ABA # ______________________, ACCT. #
________________________.
<PAGE> 71
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1989 BN-8]
TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-8], 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, [_____________] ("Transferor"), is the Owner
Participant under that certain Refunding Agreement [GPA 1989 BN-8], dated as of
June ___, 1997 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> 72
Lease TIA, the Foreign Financing Documents 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
- 2 -
<PAGE> 73
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 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
- 3 -
<PAGE> 74
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 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
- 4 -
<PAGE> 75
limiting the generality of this Guarantee, if any Beneficiary (or any assignee
thereof) shall be prevented by applicable law from exercising its remedies (or
any of them) against the Transferee under any Operative Document, such
Beneficiary (or any assignee thereof) shall be entitled to receive hereunder
from the Guarantor, upon demand therefor, the sums that would have otherwise
been due from the Transferee had such remedies been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any Beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case"
(as defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that
payments hereunder shall be paid without set-off, counterclaim, deduction or
withholding, and shall be made in U.S. Dollars. If any payment hereunder is
subject to deduction or withholding, Guarantor shall pay an additional amount
such that, after deduction of all amounts required to be deducted or withheld,
the net amount actually received will equal the amount that would have been
received had such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a [type of legal personality] duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its [organization] 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,
- 5 -
<PAGE> 76
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(1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
--------------------
(1) This representation is not applicable if Transferee is a
wholly-owned subsidiary of the Owner Participant.
- 6 -
<PAGE> 77
10. Severability. Any provision of this Guarantee that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. No Beneficiary shall
by any act (except by a written instrument pursuant to Section 13 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of any Beneficiary, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by a Beneficiary of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that such Beneficiary would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
12. Integration. This Guarantee represents the entire
agreement of Guarantor with respect to the subject matter hereof and there are
no promises or representations by any Beneficiary relative to the subject
matter hereof not reflected herein.
13. Amendments and Waivers. None of the terms or
provisions of this Guarantee may be waived, amended or supplemented or
otherwise modified except by a written instrument executed by Guarantor and
each Beneficiary.
14. Section Headings. The Section headings used in this
Guarantee are for convenience of reference only and not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
15. Successors and Assigns. This Guarantee shall be
binding upon the successors and assigns of Guarantor and shall inure to the
benefit of Beneficiaries and their respective successors and assigns.
16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
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
- 7 -
<PAGE> 78
given or made when delivered by hand, or, in the case of mail, two days after
deposit in the postal system, first class postage pre-paid, or, in the case of
telegraphic notice, when sent, answerback received, addressed to (a) in the
case of the Guarantor, the address provided on the signature page hereof, and
(b) in the case of any Beneficiary, the address provided for such party in the
Refunding Agreement.
- 8 -
<PAGE> 79
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By:
-------------------------------
Title:
- 9 -
<PAGE> 80
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1989 BN-8]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-8]
("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 June ___, 1997, among America 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, [____________], as Owner Participant, Fleet National Bank, as
Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee, as
amended, modified or supplemented from time to time (the "Refunding
Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement,
(iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended
and Restated Head Lease TIA identified in the Refunding Agreement, (v) the
Foreign Financing Documents identified in the Refunding Agreement, (vi) the
Lease, (vii) the proceeds therefrom and (viii) 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
Lease, the Indenture, the Foreign Financing Documents, 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
(collectively, the "Relevant
<PAGE> 81
Documents"), 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 Agreement as
of a date prior to such date and the right to receive any indemnity payment
pursuant to the Refunding Agreement, the Amended and Restated Head Lease TIA 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 Relevant Documents to which Owner Participant is a party and any of the
other Relevant 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 Relevant 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 Relevant 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 Relevant Documents to which Owner Participant is a party or under any of
the other Relevant 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 Relevant
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
- 2 -
<PAGE> 82
acquired by Assignee; and to do all such acts and things in relation thereto at
the expense of Assignee as Assignee shall reasonably deem advisable. Assignor
hereby acknowledges that this appointment is coupled with an interest and is
irrevocable by Assignor in any manner or for any reason.
6. Payments. Assignor hereby covenants and agrees to pay
over to Assignee, if and when received following the date hereof, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of Assignor that, under Section 2 hereof, belong to Assignee, and
Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that it is
acquiring the Trust Estate interests and other interests hereby assigned to it
without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents and
warrants that:
(a) it has all requisite power and authority and legal right
to enter into and carry out the transactions contemplated hereby and
to carry out and perform the transactions of Owner Participant as
contemplated by the Relevant 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 mutatis mutandis and as set forth in any other
Agreement to which Owner Participant is a party are true and correct
as to Assignee;
(d) it is a permitted Transferee under Section 10 of the
Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital,
surplus and undivided profits] [tangible net worth] of not less than
$60,000,000.
9. Governing Law. This Assignment and Assumption Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
- 3 -
<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:
- 4 -
<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
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1989 BN-8] No. 2 dated June
__, 1997 (the "Trust Agreement Supplement") between the Owner
Trustee and the Owner Participant, amending the Trust
Agreement, which Trust Agreement Supplement was filed with the
FAA at _____ p.m., C.D.T. on June __, 1997;
(b) Amended and Restated Trust Indenture and Security Agreement
[GPA 1989 BN-8] dated as of June __, 1997 (the "Amended and
Restated Indenture") between the Owner Trustee and the
Indenture Trustee, amending and restating the Original
Indenture with attached thereto Trust Agreement and Indenture
Supplement No. 2 [GPA 1989 BN-8] dated June __, 1997 (the
"Indenture Supplement"), with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture Supplement
attached was filed with the FAA at _____ p.m., C.D.T. on June
__, 1997;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of June __, 1997 (the "Lease Amendment")
among the Original Head Lessee, as assignor, the Owner
Trustee, as lessor, the Lessee, as successor lessee, and the
Indenture Trustee, which (i) assigns certain right, title and
interest of the Original Head Lessee in and to the Original
Head Lease to the Lessee, (ii) terminates the Sublease and
(iii) releases the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at _____ p.m., C.D.T. on June
__, 1997; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-8]
dated as of December 19, 1989, amended and restated as of June
__, 1997 (the "Amended and Restated Lease") between the Owner
Trustee, as lessor, and the Lessee, as successor lessee,
amending and restating the Original Head Lease with Lease
Supplement [GPA 1989 BN-8] No. 3 dated June __, 1997 (the
"Lease Supplement") between the Owner Trustee, as lessor, and
the Lessee, as successor lessee, with respect to the Aircraft,
attached thereto, which Amended and Restated Lease with the
Lease Supplement attached was filed with the FAA at _____
p.m., C.D.T. on June __, 1997.
<PAGE> 87
Description of Hire Purchase Agreement
Aircraft Hire Purchase Agreement (1989 B) dated as of December
19, 1989 between Air Tara Hong Kong, Limited, as owner, and the companies
listed in Schedule 1 thereto as partners in a Hong Kong limited partnership
carrying on business under the name of the Shamrock II Leasing Limited
Partnership, as hire, with the following attached thereto:
(i) Acceptance Certificate dated December 29, 1989; and,
(ii) Bill of Sale and HPA Assignment [GPA 1989 BN-8] dated
as of December 19, 1989 from Air Tara Hong Kong
Limited, as seller, to Wilmington Trust Company, as
trustee under Trust Agreement [GPA 1989 BN-8] dated
as of December 19, 1989,
which was recorded as one instrument by the Federal Aviation Administration on
January 19, 1990 and assigned Conveyance No. H68554.
- 2 -
<PAGE> 88
Description of Lease A
Aircraft Lease Agreement (1989 B) dated as of December 19,
1989 between the companies listed in Schedule 1 thereto as partners in a Hong
Kong limited partnership carrying on business under the name of the Shamrock II
Leasing Limited Partnership, as lessor, and GPA HK-320-B, Limited, as lessee,
with the following attached thereto:
(i) Acceptance Certificate dated December 29, 1989;
(ii) General Assumption Agreement (1989 B) dated as of
December 19, 1989;
(iii) Charge (1989 B) dated as of December 19, 1989;
(iv) Assignment of Lease Agreement, General Assumption
Agreement and of Charge (1989 B) dated as of December
19, 1989 between GPA HK-320-B, Limited, as assignor,
and Wilmington Trust Company, as trustee under Trust
Agreement [GPA 1989 BN-8] dated as of December 19,
1989, as assignee; and,
(v) Consent (1989 B) dated December 19, 1989,
which was recorded as one instrument by the Federal Aviation Administration on
January 19, 1990 and assigned Conveyance No. H68555.
- 3 -
<PAGE> 89
Description of Indenture
Trust Indenture and Security Agreement [GPA 1989 BN-8] dated
as of December 19, 1989 between Wilmington Trust Company, as trustee under
Trust Agreement [GPA 1989 BN-8] dated as of December 19, 1989, and
Manufacturers Hanover Trust Company, as indenture trustee, which was recorded
by the Federal Aviation Administration on January 19, 1990 and assigned
Conveyance No. H68557, as supplemented by the following described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Indenture
Supplement No. 1 12/29/89 01/19/90 H68557
</TABLE>
- 4 -
<PAGE> 90
Description of Lease B
Aircraft Lease Agreement [GPA 1989 BN-8] dated as of December
19, 1989 between Wilmington Trust Company, as trustee under Trust Agreement
[GPA 1989 BN-8] dated as of December 19, 1989, as lessor, and GPA Leasing USA
Sub I, Inc., as lessee, which was recorded by the Federal Aviation
Administration on January 19, 1990 and assigned Conveyance No. H68558, 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-8]
No. 1 12/29/89 01/19/90 H68558
Lease Supplement
[GPA 1989 BN-8]
No. 2 12/no date/94 02/27/95 JJ13285
</TABLE>
- 5 -
<PAGE> 91
Description of Sublease
Aircraft Sublease Agreement [GPA 1989 BN-8] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on October 11, 1990 and assigned Conveyance No. 258042,
as supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 10/11/90 258042
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-8] 06/25/91 07/09/91 A43606
Amendment No. 2 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-8] 08/26/91 10/01/91 DD001721
</TABLE>
- 6 -
<PAGE> 1
Exhibit 4.15
================================================================================
REFUNDING AGREEMENT
[GPA 1989 BN-11]
Dated as of June ___, 1997
among
AMERICA WEST AIRLINES, INC.,
as Lessee
GPA LEASING USA SUB I, INC.,
as Original Head Lessee
GPA GROUP plc,
as Parent Guarantor
WILMINGTON TRUST COMPANY,
not in its individual capacity
except as expressly provided herein
but solely as Owner Trustee
FLEET NATIONAL BANK,
not in its individual capacity
except as expressly provided herein
but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements
[_______________________],
as Owner Participant
FLEET NATIONAL BANK,
as Subordination Agent
and
THE CHASE MANHATTAN BANK,
not in its individual capacity
except as expressly provided herein
but solely as Indenture Trustee
================================================================================
Secured Equipment Notes Covering
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 81
Registration No. N632AW
Leased by America West Airlines, Inc.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. Purchase of Equipment Notes; Refunding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2. Equipment Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. Certain Conditions Precedent to the Obligations
of the Original Head Lessee and the Parent
Guarantor; Certain Conditions Precedent to the
Obligations of the Lessee; Conditions Precedent
with Respect to the Pass Through Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. Amendment and Restatement of the Original
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6. Amendment and Restatement of the Original Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 21. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 22. Reliance of Liquidity Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 23. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 24. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 25. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
Annex
-----
Annex A FAA Documents
- ii -
<PAGE> 4
REFUNDING AGREEMENT
[GPA 1989 BN-11]
REFUNDING AGREEMENT [GPA 1989 BN-11] (this "Agreement"), dated
as of June ___, 1997, 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 four separate Pass
Through Trust Agreements (as defined below), (vii) FLEET NATIONAL BANK, not in
its individual capacity, but solely as subordination agent and trustee (in such
capacity, the "Subordination Agent") under the Intercreditor Agreement (as
defined below), and (viii) THE CHASE MANHATTAN BANK (formerly known as Chemical
Bank, successor by merger to Manufacturers Hanover Trust Company), a New York
corporation, not in its individual capacity except as otherwise expressly
provided herein, but solely as Indenture Trustee (the "Indenture Trustee")
under the Indenture (as defined below).
Except as otherwise defined in this Agreement, the terms used
herein in capitalized form shall have the meanings attributed thereto in the
Indenture (whether set forth therein or by reference to another document) as if
the Restatement Date had occurred.
W I T N E S S E T H:
WHEREAS, the Original Head Lessee, the Parent Guarantor, the
Owner Participant, Manufacturers Hanover Trust Company and The Mitsubishi Trust
and Banking Corporation Grand Cayman Branch, as Lenders (the "Lenders"), the
Owner Trustee and the Indenture Trustee are parties to the Participation
Agreement [GPA 1989 BN-11], dated as of December 19, 1989 (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-11], dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1, dated
December 29, 1989 (as so supplemented or otherwise modified to the date hereof,
the "Original Indenture"), pursuant to which the Owner
<PAGE> 5
Trustee issued loan certificates substantially in the form set forth in Section
2.02 thereof (the "Original Certificates") to the Lenders as evidence of the
indebtedness then being made by the Owner Trustee to finance a portion of the
purchase price of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the
Participation Agreement, the Owner Trustee and the Original Head Lessee entered
into the Aircraft Lease Agreement [GPA 1989 BN-11], dated as of December 19,
1989, as supplemented by Lease Supplement [GPA 1989 BN-11] No. 1 dated December
29, 1989 and as further supplemented by Lease Supplement [GPA 1989 BN-11] No. 2
dated January 5, 1995 (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-11] 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, the Owner Participant and the Trust Company are
parties to the Trust Agreement [GPA 1989 BN- 11], dated as of December 19,
1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-11] No. 1
dated December 29, 1989 (as amended, supplemented or otherwise modified to the
date hereof, the "Original Trust Agreement"), pursuant to which the Owner
Trustee agreed, among other things, to hold the Trust Estate defined in Section
1.1 thereof for the benefit of the Owner Participant thereunder;
WHEREAS, the Owner Participant and the Original Head Lessee
are parties to the Head Lease Tax Indemnification Agreement [GPA 1989 BN-11],
dated as of December 19, 1989 (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 1989 BN-11] dated as of September 21, 1990, as
supplemented by Sublease Supplement No. 1 dated September 28, 1990 and as
amended by Amendment No. 1 to Aircraft Sublease
- 2 -
<PAGE> 6
Agreement [GPA 1989 BN-11] dated as of June 25, 1991, and as further amended by
Amendment No. 2 to Aircraft Sublease Agreement [GPA 1989 BN-11] 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 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-11], 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-11] dated as of
September 21, 1990 (as amended, modified or otherwise supplemented to the date
hereof, the "Assignment of Sublease");
WHEREAS, at the Closing (as defined below), the Owner Trustee
and the Indenture Trustee will amend and restate the Original Indenture as the
First Amended and Restated Trust Indenture and Security Agreement [GPA 1989 BN-
11], dated as of the Restatement Date (the "First Amended and Restated
Indenture" and, the First Amended and Restated Indenture as so amended and
restated, the "Indenture"), under which Indenture the Owner Trustee will issue
secured equipment notes substantially in the form set forth in Section 2.01
thereof (the "Equipment Notes") in four series, the proceeds from the issuance
and sale of which will be applied in part to the prepayment in full of the
Original Certificates;
WHEREAS, at the Closing, the Owner Trustee, the Original Head
Lessee, the Sublessee and the Indenture Trustee will enter into Assignment and
Amendment No. 1 and Sublease Termination Agreement dated as of the Restatement
Date ("Lease Amendment No. 1") containing assignments, modifications and
terminations necessary to give effect to the transactions described herein and
providing, inter alia, for the amendment and restatement in its entirety of the
Original Lease as the Amended and Restated Lease (as so amended and restated,
the "Lease");
- 3 -
<PAGE> 7
WHEREAS, at the Closing, the Owner Participant and the Owner
Trustee will enter into Trust Agreement Supplement [GPA 1989 BN-11] No. 2
("Trust Supplement No. 2"), amending the Original Trust Agreement (as so
amended and as further amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof, the "Trust Agreement");
WHEREAS, at the Closing, the Owner Participant and the
Original Head Lessee will enter into the Amended and Restated Head Lease Tax
Indemnification Agreement, amending and restating the Head Lease TIA (as so
amended and restated, the "Amended and Restated Head Lease TIA") and the
Sublessor and the Sublessee will enter into the Amended and Restated Sublease
Tax Indemnification Agreement, amending and restating the Sublease TIA (as so
amended and restated, the "Amended and Restated Sublease TIA");
WHEREAS, pursuant to the Pass Through Trust Agreement and each
of the Pass Through Trust Supplements set forth in Schedule I hereto
(collectively, the "Pass Through Trust Agreements"), on the Restatement Date,
four separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") will be created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale by each Pass Through Trust of pass through certificates
pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the
Certificates by each Pass Through Trust will be applied by the Pass Through
Trustee at the Closing to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Equipment Notes bearing the same interest rate
as the Certificates issued by such Pass Through Trust;
WHEREAS, at the Closing, (i) Kredietbank N.V., New York Branch
(the "Liquidity Provider") will enter into three revolving credit agreements
(each, a "Liquidity Facility"), for the benefit of the Holders of Equipment
Notes of each of three Pass Through Trusts, with the Subordination Agent, as
agent for the Pass Through Trustee on behalf of each such Pass Through Trust;
and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination
Agent will enter into the Intercreditor Agreement, dated as of the Restatement
Date (the "Intercreditor Agreement"); and
WHEREAS, the Equipment Notes will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
- 4 -
<PAGE> 8
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual agreements herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding. (a)
Subject to the satisfaction or waiver of the conditions set forth herein, on
June ___, 1997 or on such other date agreed to by the parties hereto (the
"Restatement Date"), the following actions shall take place simultaneously:
(i) (A) the Sublessee shall pay to the Sublessor
as a payment of Supplemental Rent under the Sublease all
accrued and unpaid Rent under the Sublease up to the
Restatement Date, if any (less any amounts for which Sublessee
is indemnified by Sublessor) and (B) the Original Head Lessee
shall pay to the Owner Trustee, as a payment of Supplemental
Rent under the Original Lease, an amount equal to the accrued
and unpaid interest on the Original Certificates up to but not
including the Restatement Date plus an amount (the "Prepayment
Amount") equal to all other amounts due to the holders of the
Original Certificates under the Original Indenture and the
other Operative Documents (as defined in the Original
Indenture) payable on the Restatement Date under Section 2.13
of the Original Indenture;
(ii) the Pass Through Trustee for each Pass
Through Trust shall pay to the Owner Trustee the aggregate
purchase price of the Equipment Notes being issued to such
Pass Through Trustee as set forth in clause (xii) below;
(iii) the Owner Trustee (to the extent of proceeds
received under clauses (i) and (ii)) shall pay to the
Indenture Trustee for the benefit of the holders of the
Original Certificates an amount equal to the aggregate
principal amount of the Original Certificates outstanding on
the Restatement Date, together with accrued and unpaid
interest on the Original Certificates up to but not including
the Restatement Date plus the Prepayment Amount;
(iv) the Indenture Trustee shall disburse to the
holders of the Original Certificates the amounts of principal,
interest, and all other amounts, 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;
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<PAGE> 9
(v) the Indenture Trustee shall receive the
Original Certificates for cancellation;
(vi) the Owner Trustee and the Indenture Trustee
shall enter into the Indenture (including Trust Indenture
Supplement No. 2);
(vii) the Original Head Lessee, the Sublessee, the
Owner Trustee and the Indenture Trustee shall enter into Lease
Amendment No. 1;
(viii) the Owner Participant and the Trust Company
shall enter into Trust Supplement No. 2;
(ix) the Original Head Lessee and the Owner
Participant shall enter into the Amended and Restated Head
Lease TIA and the Sublessor and the Sublessee shall enter into
the Amended and Restated Sublease TIA;
(x) the Original Head Lessee, GPA Leasing USA I,
Inc., the Parent Guarantor and the Lessee shall enter into an
agreement in form and substance reasonably satisfactory to
each, inter alia, confirming the termination of certain rights
which the Parent Guarantor has to "put" aircraft to the Lessee
and the obligation of the Lessee to accept and lease such
aircraft (the "Put Termination Agreement");
(xi) the Parent Guarantor and/or one or more of
its affiliates and the Lessee will enter into an agreement
(the "Deed of Indemnity") pursuant to which the Parent
Guarantor and/or one or more of its affiliates, on the one
hand, and the Lessee, on the other, will indemnify each other
with respect to certain information included in the Prospectus
and the Registration Statement (as such terms are defined in
the Underwriting Agreement) (the "Prospectus" and the
"Registration Statement", respectively); and
(xii) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, Equipment Notes of the maturity and aggregate
principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the
name of such Pass Through Trust.
(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> 10
(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, the Parent Guarantor and the Lessee have
entered into the Underwriting Agreement, dated as of the date hereof (the
"Underwriting Agreement"), among such Persons and Morgan Stanley & Co.
Incorporated (the "Underwriter"), 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)
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<PAGE> 11
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, the
Indenture Trustee and the Owner Participant each shall have received executed
counterparts of each of the following documents:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and Restated Lease
and Lease Supplement No. 3;
(3) Trust Supplement No. 2;
(4) the First Amended and Restated Indenture and Trust
Indenture Supplement No. 2;
(5) each of the Pass Through Trust Agreements and each
Pass Through Trust Supplement set forth in Schedule I
hereto;
(6) the Intercreditor Agreement;
(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 Termination and Release [GPA 1989 BN-11] dated as
of the Restatement Date among [______________], the
Lessee, the Original Head Lessee, the Parent
Guarantor, the Owner Participant, the Owner Trustee
and the Indenture Trustee.
(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
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<PAGE> 12
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 an 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 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
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<PAGE> 13
Amended and Restated Indenture, Trust Indenture Supplement No.
2 and Trust Supplement No. 2 covering the Aircraft shall have
been duly filed for recordation with the FAA pursuant to the
Federal Aviation Act;
(4) the Aircraft has been registered with the FAA in
the name of the Owner Trustee;
(5) the Lessee has authority to operate the
Aircraft; and
(6) the representations and warranties contained
herein of the Lessee are correct as of the Restatement Date,
except to the extent that such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(e) The Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(1) an incumbency certificate of the Indenture
Trustee as to the person or persons authorized to execute and
deliver this Agreement and each of the other documents to be
executed on behalf of the Indenture Trustee in connection with
the transactions contemplated hereby (including, without
limitation, each of the documents referred to herein) and as
to the signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Indenture Trustee, certified by the Secretary
or an Assistant Secretary 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 organization certificate and
by-laws of the Indenture Trustee, each certified by the
Secretary or an Assistant Secretary 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> 14
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) a secretary's certificate of
[___________________] (the "Managing Partner"), as to (i) the
Certificate of Incorporation and By-laws of the Managing
Partner, (ii) the General Operating Resolution of the Managing
Partner and (iii) the incumbency and signatures of persons
authorized pursuant to such General Operating Resolution to
execute and deliver this Agreement and each of the other
documents to be executed by the Managing Partner on behalf of
the Owner Participant in connection with the transactions
contem-
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<PAGE> 15
plated hereby (including, without limitation, each of the
documents referred to herein);
(2) a copy of the resolutions of the board of
directors of the Managing Partner, certified by the Secretary
or an Assistant Secretary of the Managing Partner, duly
authorizing the Managing Partner to perform the rights and
duties of the managing partner of the Owner Participant under
the Partnership Agreement (as herein defined);
(3) a certificate of an officer of the Managing
Partner certifying as to excerpts from the partnership
agreement between the partners of the Owner Participant, as
amended to the Restatement Date, and as in full force and
effect as of the Restatement Date (which a complete version
thereof shall be the "Partnership Agreement");
(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); and
(5) resolutions of the partners of the Owner
Participant or other satisfactory evidence evidencing the
consent or approval by each of the partners thereof of the
execution and delivery of this Agreement and the agreements
referred to herein to which the Owner Participant is a party
and the performance by the Owner Participant of such
agreements and the transactions contemplated thereby.
(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 the 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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<PAGE> 16
(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)
White & Case, special counsel for the Owner Participant, and (ii) in-house
counsel for the Managing Partner, in each case in form and substance
satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee and the Owner
Participant shall have received an opinion from (i) White & Case, special
counsel for the Liquidity Provider, and (ii) in-house counsel for the Liquidity
Provider, in each case in form and substance satisfactory to each of them.
(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, 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 Underwriter shall have
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<PAGE> 17
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 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
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<PAGE> 18
transactions contemplated by this Agreement to the Owner Participant, the Owner
Trustee or any of their respective Affiliates.
Promptly following the recording of Lease Amendment No. 1, the
Amended and Restated Lease (including Lease Supplement No. 3) and the First
Amended and Restated Indenture (including Trust Indenture Supplement No. 2)
pursuant to the Federal Aviation Act, the Original Head Lessee will cause
Daugherty, Fowler & Peregrin, special counsel in Oklahoma City, Oklahoma, to
deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the
Owner Participant and the Owner Trustee an opinion as to the due recording of
Lease Amendment No. 1, the Amended and Restated Lease, Lease Supplement No. 3,
the First Amended and Restated Indenture, Trust Indenture Supplement No. 2 and
Trust Supplement No. 2.
SECTION 4. Certain Conditions Precedent to the Obligations of
the Original Head Lessee and the Parent Guarantor; Certain Conditions Precedent
to the Obligations of the Lessee; Conditions Precedent with Respect to the Pass
Through Trustee. (a) The obligations of the Original Head Lessee and the
Parent Guarantor to participate in the transactions contemplated by this
Agreement on the Restatement Date, and to execute and deliver this Agreement
are subject to the fulfillment, prior to or on the Restatement Date, of the
following conditions precedent:
(i) Each of the Original Head Lessee and the Parent
Guarantor shall have received counterparts of the following documents
executed by each of the parties thereto other than the Original Head
Lessee and the Parent Guarantor:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Head Lease TIA;
(4) the Amended and Restated Sublease TIA;
(5) the Put Termination Agreement;
(6) the Deed of Indemnity;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Original Head
Lease executed by the Owner Trustee and/or
the Indenture Trustee and such other releases
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<PAGE> 19
and terminations as it may reasonably
request; and
(9) that certain letter agreement dated as of the
Restatement Date relating to Stipulated Loss
Values with respect to the Amended and
Restated Lease (the "SLV Letter Agreement").
(ii) Each of the Original Head Lessee and the Parent
Guarantor shall have received originals of the following documents:
(1) the incumbency certificate of the Lessee
referred to in Section 3(c)(1);
(2) the resolutions of the Lessee referred to in
Section 3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(i),
Section 3(j), Section 3(k), Section 3(l),
Section 3(m) and Section 3(n), in each case
addressed to each of the Original Head Lessee
and the Parent Guarantor and in form and
substance satisfactory to each of them;
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to the Original Head
Lessee and the Parent Guarantor and in form
and substance reasonably satisfactory to each
of them; and
(6) the report referred to in Section 3(h)
addressed to each of the Original Head Lessee
and the Parent Guarantor.
(iii) Each of the Original Head Lessee and the Parent
Guarantor shall have received such other documents and evidence with
respect to each other party hereto as each of them or its counsel may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement and the "Refunding
Agreements" (as defined in the Registration Statement), the taking of
all necessary action in connection therewith and compliance with the
conditions herein or therein set forth.
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<PAGE> 20
(b) The obligations of the Lessee to make the payment
described in Section 1(a)(i)(A) (if any), to participate in the transactions
contemplated by this Agreement on the Restatement Date, and to execute and
deliver each of the Pass Through Trust Agreements are subject to the
fulfillment, prior to or on the Restatement Date, of the following conditions
precedent:
(i) The Lessee shall have received counterparts of the
following documents executed by each of the parties thereto other than
Lessee:
(1) this Agreement;
(2) Lease Amendment No. 1, the Amended and
Restated Lease and Lease Supplement No. 3;
(3) the Amended and Restated Sublease TIA;
(4) the Put Termination Agreement;
(5) the Deed of Indemnity;
(6) the Pass Through Trust Agreements;
(7) the Underwriting Agreement;
(8) Uniform Commercial Code termination
statements relating to the Sublease executed
by the Original Head Lessee; and
(9) the SLV Letter Agreement.
(ii) The Lessee shall have received originals of the
following documents:
(1) the incumbency certificate of the Original
Head Lessee and Parent Guarantor referred to
in Section 3(c)(1);
(2) the resolutions of the Original Head Lessee
and Parent Guarantor referred to in Section
3(c)(2);
(3) the documents referred to in Section 3(e),
Section 3(f) and Section 3(g);
(4) the opinions referred to in Section 3(j),
Section 3(k), Section 3(l), Section 3(m),
Section 3(n), Section 3(o) and Section 3(p),
in each case addressed to Lessee and in form
and substance satisfactory to Lessee; and
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<PAGE> 21
(5) the opinions of Paul, Hastings, Janofsky &
Walker LLP and Milbank, Tweed, Hadley &
McCloy with respect to certain matters
relating to and described in the Prospectus,
in each case addressed to Lessee and in form
and substance reasonably satisfactory to
Lessee.
(iii) The Lessee shall have received such other documents
and evidence with respect to each other party hereto as Lessee or its
counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement and
the "Refunding Agreements" (as defined in the Registration Statement),
the taking of all necessary action in connection therewith and
compliance with the conditions herein and therein set forth.
(c) The respective obligations of each of the Lessee, the
Pass Through Trustee (solely as to clause (ii)), the Original Head Lessee, the
Owner Participant, the Owner Trustee and the Indenture Trustee to participate
in the transactions contemplated hereby is subject to the receipt by each of
them of (i) a certificate signed by an authorized officer of the Pass Through
Trustee, dated the Restatement Date, certifying that the representations and
warranties contained herein and in the Pass Through Trust Agreements of the
Pass Through Trustee are correct as of the Restatement Date, except to the
extent that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties are correct on and as
of such earlier date), (ii) an opinion addressed to each of them of Shipman &
Goodwin LLP, special counsel for the Pass Through Trustee, in form and
substance satisfactory to each of them, and (iii) such other documents and
evidence with respect to the Pass Through Trustee as it may reasonably request
in order to establish the due consummation of the transactions contemplated by
this Agreement, the taking of all necessary action in connection therewith and
compliance with the conditions herein set forth.
SECTION 5. Amendment and Restatement of the Original
Indenture. Subject to the satisfaction or waiver of the conditions precedent
set forth herein, the Owner Participant, by execution and delivery hereof,
requests, authorizes and directs the Owner Trustee to execute and deliver the
First Amended and Restated Indenture, and the Owner Trustee and the Indenture
Trustee, by execution and delivery hereof, agree to execute and deliver the
First Amended and Restated Indenture. Each of the Original Head Lessee, the
Parent Guarantor and the Lessee, by execution and delivery hereof, consent to
such execution and delivery of the First Amended and Restated Indenture. The
First Amended and Restated Indenture shall be effective as of the Restatement
Date.
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<PAGE> 22
SECTION 6. Amendment and Restatement of the Original Lease.
Subject to the satisfaction or waiver of the conditions precedent set forth
herein, the Indenture Trustee, the Pass Through Trustee, the Parent Guarantor
and the Owner Participant, by execution and delivery hereof, consent to the
assignments, delegations, and releases set forth in, and to the amendment and
restatement of the Original Lease effected by, and the Owner Participant
requests and instructs the Owner Trustee to execute and deliver, Lease
Amendment No. 1, and the Owner Trustee, the Original Head Lessee, the Indenture
Trustee and the Sublessee agree, by execution and delivery hereof, to execute
and deliver Lease Amendment No. 1. The Amended and Restated Lease shall be
effective as of the Restatement Date.
SECTION 7. Termination of the Participation Agreement;
Termination of Sublease, etc. Subject to the satisfaction or waiver of the
conditions precedent set forth herein, the Owner Participant, the Owner
Trustee, the Original Head Lessee, the Parent Guarantor and the Indenture
Trustee, by execution and delivery hereof, agree that, with effect from and
including the Restatement Date and except as otherwise provided in Section 15
hereof, the Participation Agreement shall terminate and forever be without
force and effect, conferring no rights and imposing no obligations on the
parties thereto. Upon the execution and delivery of Lease Amendment No. 1 by
each of the parties thereto, the Sublease, the Sublease Guaranty and the
Assignment of Sublease shall terminate as and to the extent set forth herein
and therein. Lease Amendment No. 1 shall be effective as of the Restatement
Date.
SECTION 8. Representations and Warranties of the Lessee. The
Lessee represents and warrants, as of the Restatement Date, to the Original
Head Lessee (except as to the representation and warranty contained in Section
8(i)), the Parent Guarantor (except as to the representation and warranty
contained in Section 8(i)), the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Liquidity Provider and the Indenture Trustee that:
(a) the Lessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has the corporate power and authority to own or hold under lease its
properties, has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and perform its
obligations under this Agreement, Lease Amendment No. 1, the Lease,
the Pass Through Trust Agreements, the Amended and Restated Sublease
TIA, the SLV Letter Agreement and any certificate delivered by the
Lessee pursuant to the foregoing (the "Lessee Documents") and is duly
qualified to do business as a foreign corporation in each jurisdiction
where the failure to so qualify would have a material adverse effect
on its
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<PAGE> 23
business, operations or condition (financial or otherwise), or on its
ability to perform its obligations under the Lessee Documents;
(b) the Lessee is a Certificated Air Carrier, and its chief
executive office (as such term is used in Article 9 of the Uniform
Commercial Code in effect in the State of Arizona) is located at 4000
East Sky Harbor Boulevard, Phoenix, Arizona 85034;
(c) the execution and delivery by the Lessee of the Lessee
Documents and the performance of the obligations of the Lessee under
the Lessee Documents have been duly authorized by all necessary
corporate action on the part of the Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holder
of any material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule, regulation,
judgment or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the provisions
of, or constitute a default under, or result in the creation of any
Lien (other than Permitted Liens) upon the property of the Lessee
under, any indenture, mortgage, contract, lease or other agreement in
each case having payment obligations in excess of $500,000 to which
the Lessee is a party or by which it may be bound or affected;
(d) neither the execution and delivery by the Lessee of the
Lessee Documents nor the performance of the obligations of the Lessee
under the Lessee Documents nor the consummation by the Lessee of any
of the transactions contemplated by the Lessee Documents, requires the
consent or approval of, the giving of notice to, the registration
with, or the taking of any other action in respect of, the Department
of Transportation, the FAA, or any other federal, state, local or
foreign governmental authority having jurisdiction, other than those
which have already been received and which the Lessee is in compliance
with and (i) the registration of the Certificates under the Securities
Act of 1933, as amended (the "Securities Act") and the securities laws
of any state in which the Certificates may be offered for sale if the
laws of such state require such action, (ii) the qualification of the
Pass Through Trust Agreements under the Trust Indenture Act of 1939,
as amended, (iii) (A) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities 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
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<PAGE> 24
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 Amended and Restated Lease, Lease
Supplement No. 3, Trust Supplement No. 2, the First Amended and
Restated Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the FAA, the
filing of a Uniform Commercial Code ("UCC") amended financing
statement with the Secretary of State of the State of Delaware with
regard to the Original
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<PAGE> 25
Lease, the filing of UCC termination statements with regard to the
Original Head Lessee with the Secretary of State of the States of New
York, Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State of
Arizona with respect to the Lease, the filing of a UCC termination
statement with the Secretary of State of the State of Arizona with
respect to the Sublease, and the filing of a UCC termination statement
with the Secretary of State of the State of Delaware with respect to
the Initial Sublease Assignment (as defined in the Original Lease) all
of which financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof and
continuation statements at periodic intervals), and other than the
taking of possession by the Indenture Trustee of the original
counterparts of the Original Lease, Lease Amendment No. 1, the Amended
and Restated Lease, and all Lease Supplements thereto (to the extent
the Lease constitutes chattel paper), and the placing of the Lease
identification required by Section 6(e) of the Lease, no further
filing or recording of the Lease or of any other document (including
any financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is necessary,
under the laws of the United States of America or the States of
Delaware, New York and Arizona in order to perfect the Owner Trustee's
interest in the Aircraft as against the Lessee and any third parties,
or to perfect the security interest in favor of the Indenture Trustee
in the Owner Trustee's interest in the Aircraft and in the Lease;
(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
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<PAGE> 26
case or in the aggregate, could have no material adverse effect on the
Lessee, its condition (financial or otherwise), business, operations
or prospects, or on its ability to perform its obligations under the
Lease or which are being diligently contested by the Lessee in good
faith by appropriate proceedings and with appropriate reserves;
(n) the financial statements together with the notes related
thereto contained in the Registration Statement are complete in all
material respects and fairly present the Lessee's financial condition
as of December 31, 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) and do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading; since December 31, 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 or the non- payment of such Taxes do not involve any
material danger to the sale, forfeiture or loss of the Aircraft;
(p) the Lessee is not a "national" of any designated
foreign country within the meaning of the Foreign Assets Control
Regulations or the Cuban Assets Control Regulations of the United
States Treasury Department, 31 Code of Federal Regulations, Subtitle
B, Chapter V, as amended, or of any regulations, interpretations or
rulings issued thereunder, and the Lessee is not, and is not acting on
behalf of or for the benefit of, an "Iranian Entity" within the
meaning of the Iranian Assets Control Regulations of the United States
Treasury Department, 31 Code of Federal Regulations, Subtitle B,
Chapter V, as amended, and the transactions contemplated by this
Agreement are not prohibited by Executive Order 12170, the
above-mentioned Iranian Assets Control Regulations or any regulations,
interpretations or rulings issued under any thereof;
(q) no part of the Rent or other payments made by the
Lessee under the Lease or under the other Operative Docu-
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<PAGE> 27
ments will be made out of the assets of any "employee benefit plan" as
defined in Section 3(3) of ERISA;
(r) no representation or warranty of the Lessee contained
in any Lessee Document or other information in writing furnished to
the Owner Participant or the Indenture Trustee by the Lessee in
connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading; there is no
fact known to the Lessee (other than matters of a general economic
nature) which the Lessee has not disclosed in writing to the Owner
Participant or the Indenture Trustee which could impair its ability to
perform its obligations under the Lessee Documents; and
(s) if the Lessee were to become a debtor under the
Bankruptcy Code, the Lessor as lessor of the Aircraft under the Lease,
and the Indenture Trustee, as assignee of the Owner Trustee's rights
under the Lease pursuant to the Indenture, would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
Aircraft.
SECTION 9. Representations and Warranties. Each of the
parties below represents and warrants, as of the Restatement Date, to each of
the other parties to this Agreement and to the Liquidity Provider (except that
the representation and warranty set forth in Section 9(f)(8) shall be a
representation and warranty of the Original Head Lessee to the Lessee only) as
follows:
(a) The Indenture Trustee in its individual capacity (and as
Indenture Trustee to the extent provided in clause (6) below)
represents and warrants that:
(1) the Indenture Trustee is a corporation duly
organized, validly existing and in good standing under the
laws of the State of New York, is a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal
Aviation Act and the rules and regulations of the FAA
thereunder (as so defined, a "Citizen of the United States")
(without making use of a voting trust, voting powers agreement
or similar arrangement), will notify promptly all parties to
this Agreement if in its reasonable opinion its status as a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement) is
likely to change and will resign as Indenture Trustee as
provided in Section 8.02 of the Indenture promptly after it
obtains actual knowledge that it has ceased to be such a
Citizen of the United States (without making use of a voting
trust, voting powers agreement or
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<PAGE> 28
similar arrangement), and has the full corporate power,
authority and legal right under the laws of the State of New
York and the federal laws of the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver
each of this Agreement, the Indenture and each other Operative
Document to which it is a party and to carry out its
obligations under this Agreement, the Indenture and each other
Operative Document to which it is a party;
(2) neither the execution and delivery by the
Indenture Trustee of this Agreement, the Indenture, Lease
Amendment No. 1 and each other Operative Document to which it
is a party, nor the consummation by it of any of the
transactions contemplated hereby or thereby, nor the
compliance by it with any of the terms and provisions hereof
and thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Operative Documents) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which it
is bound, or contravenes or will contravene any law,
governmental rule or regulation or any judgment or order
applicable to or binding on it of any United States
governmental authority or agency governing the trust powers of
the Indenture Trustee;
(3) this Agreement constitutes, and the Indenture,
when executed and delivered by the Indenture Trustee, will
constitute, the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in a
proceeding at law or in equity;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Indenture
Trustee, either in its individual capacity or as Indenture
Trustee, before any court or administrative agency which, if
determined adversely to it, would
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<PAGE> 29
materially adversely affect the ability of the Indenture
Trustee, in its individual capacity or as Indenture Trustee,
as the case may be, to perform its obligations under the
Operative Documents to which it is a party;
(5) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any State of New York or any
United States of America governmental authority or agency
regulating the trust powers of the Indenture Trustee is
required for the execution and delivery of, or the carrying
out by, the Indenture Trustee of any of the transactions
contemplated hereby or by the Indenture, Lease Amendment No. 1
or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has
been duly obtained, given or taken;
(6) there are no Lenders' Liens (as defined in the
Lease) on the Aircraft or any portion of the Trust Estate
created by or through the Indenture Trustee in its individual
capacity; and
(7) it has possession of the chattel paper
original counterpart of the Original Lease, Lease Amendment
No. 1 and the Lease.
(b) Each of the Trust Company (except with respect to clauses
(2)(ii), (3), (4)(i) and (6) below, which representations and
warranties are made solely by the Owner Trustee) and the Owner Trustee
(except with respect to clauses 1(i), (2)(i), 4(ii), (7), (11) and
(12) below, which representations and warranties are made solely by
the Trust Company) represents and warrants that:
(1) (i) 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 (ii) 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,
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<PAGE> 30
Lease Amendment No. 1, the Lease and each other Operative
Document (other than the Trust Agreement) to which it is a
party;
(2) (i) the Trust Company has duly authorized,
executed and delivered the Trust Agreement (and, to the extent
provided herein to be in its individual capacity, this
Agreement) and (assuming the due authorization, execution and
delivery of Trust Supplement No. 2 by the Owner Participant)
the Trust Agreement (and, to the extent provided herein to be
in its individual capacity, this Agreement) constitutes a
legal, valid and binding obligation of the Trust Company,
enforceable against it in accordance with its terms, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity, (ii) the Owner Trustee has duly authorized, executed
and delivered this Agreement and (assuming the due
authorization, execution and delivery of Trust Supplement No.
2 by the Owner Participant) this Agreement and the Trust
Agreement constitute, and the Indenture and the Lease, when
entered into, will constitute, legal, valid and binding
obligations of the Owner Trustee, 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, upon such issuance, execution and delivery by
the Owner Trustee and authentication by the Indenture Trustee
in accordance with the terms of the Indenture, each Equipment
Note issued 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) (i) neither the execution and delivery by the
Owner Trustee of this Agreement, the Original Trust
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<PAGE> 31
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
or thereof, contravenes or will contravene any judgment or
order applicable to or binding on it, and (ii) neither the
execution and delivery by the Trust Company 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 or 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 law, governmental rule or regulation of the
State of Delaware or any United States governmental authority
or agency governing the trust powers of the Trust Company, 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, State of New
York 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;
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<PAGE> 32
(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;
(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;
(11) it is a Citizen of the United States (without
making use of a voting trust agreement, voting powers
agreement or similar arrangements); and
(12) there has not occurred any event which
constitutes (or to the best of its knowledge would,
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<PAGE> 33
with the passage of time or the giving of notice or both,
constitute) an Event of Default as defined in the Indenture
which has been caused by or relates to the Trust Company and
which is presently continuing.
(c) The Owner Participant represents and warrants that:
(1) it is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization, has the partnership 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 partnership power and
authority to enter into and to perform its obligations under
this Agreement, the Trust Agreement, the SLV Letter Agreement
and the Amended and Restated Head Lease TIA; this Agreement,
the SLV Letter Agreement and Trust Supplement No. 2 have been
duly authorized, executed and delivered by it; assuming the
due authorization, execution and delivery hereof and thereof
by the other parties hereto and thereto, this Agreement, the
Trust Agreement, the SLV Letter Agreement and the Amended and
Restated Head Lease TIA constitute the legal, valid and
binding obligations of the Owner Participant enforceable
against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity; and the Managing Partner 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 execute and deliver this Agreement, the
Trust Agreement, the SLV Letter Agreement and the Amended and
Restated Head Lease TIA on behalf of the Owner Participant;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the Trust Agreement, the
SLV Letter Agreement, the Amended and Restated Head Lease TIA
or any other Operative Document to which it is a party nor (B)
compliance by it with all of the provisions hereof or thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding on
the Owner Participant (it being understood that no
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<PAGE> 34
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, the
Partnership Agreement or any indenture, mortgage, contract or
other agreement or instrument to which the Owner Participant
is a party or by which it or any of its property may be bound
or affected, except where such contravention or default would
not result in any liability to any other party hereto or have
a material adverse effect on the rights or on the remedies of
the other parties hereto or on its ability to perform its
obligations hereunder or thereunder;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body (other than as required by the Federal
Aviation Act or the regulations promulgated thereunder) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement, the Trust
Agreement and the Amended and Restated Head Lease TIA (it
being understood that no representation or warranty is made
with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner
Trustee other than the laws, rules or regulations relating to
aircraft lease transactions generally or to the citizenship
requirements of the Owner Participant under the Federal
Aviation Act);
(4) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Participant or any of its partners before any court or
administrative agency or arbitrator which, if determined
adversely to the Owner Participant or such partner(s), would
materially adversely affect the Owner Participant's ability to
perform its obligations under this Agreement, the Trust
Agreement, the SLV Letter Agreement or the Amended and
Restated Head Lease TIA;
(5) on the Restatement Date, the Trust Estate shall
be free of Lessor's Liens and Head Lessor's Liens attributable
to the Owner Participant and its partners (including for this
purpose Liens that would be Lessor's Liens but for the first
proviso in the definition of Lessor's Liens); and
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<PAGE> 35
(6) each of its partners 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 the
Owner Participant or any partner of the Owner Participant has
ceased to be, or the Owner Participant shall have actual
knowledge that the Owner Participant or any partner of the
Owner Participant is likely to cease to be, such a citizen,
and (i) the Aircraft shall be or would thereupon become
ineligible for registration in the name of Owner Trustee under
the Federal Aviation Act as in effect at such time (without
regard to the "based and primarily used" provisions thereof)
and the regulations then applicable thereunder, or (ii) the
Aircraft is registered in a jurisdiction other than the United
States of America, in circumstances in which the preceding
clause (i) does not apply and the Lessee or any Permitted
Sublessee at any time proposes to register the Aircraft in the
United States of America, then Owner Participant shall (at its
own expense and without any reimbursement or indemnification
from the Lessee or any Permitted Sublessee) (A) immediately
either (1) transfer in accordance with Section 10 hereof all
of its right, title and interest in and to the Trust
Agreement, the Trust Estate, this Agreement and the Amended
and Restated Head Lease TIA or (2) take such other action,
including, without limitation, the establishment of a voting
trust or voting powers agreement (in which case Owner
Participant shall remain the beneficial owner of the Trust
Estate), as may be necessary to prevent the deregistration of
the Aircraft under the Federal Aviation Act or to maintain
such registration of the Aircraft or to make possible such
registration of the Aircraft in the United States of America
and to prevent Indenture Trustee, the Holders of the Equipment
Notes, the Lessee or any Permitted Sublessee from being
adversely affected as a result thereof and (B) indemnify the
Lessee, the Indenture Trustee, the Holders of the Equipment
Notes and any Permitted Sublessee, from and against any and
all Claims incurred or suffered as a result of such partner's
or partners' 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
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<PAGE> 36
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 nor contravenes or results
in any breach of, or constitutes 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
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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 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
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<PAGE> 38
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 Underwriter
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
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 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 Inter-
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<PAGE> 39
creditor 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 any 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
Agreement or any of the Liquidity Facilities) solely because
the Subordination Agent maintains an office and administers
its trust business in the State of
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<PAGE> 40
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 Underwriter
or the Lessee.
(f) The Original Head Lessee represents and warrants that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Connecticut and
has the corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has the corporate power and authority to enter into and to
perform its obligations under this Agreement, Lease Amendment
No. 1, the Amended and Restated Head Lease TIA, the Amended
and Restated Sublease TIA and the SLV Letter Agreement
(collectively, the "Original Head Lessee Transaction
- 37 -
<PAGE> 41
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 Agreement or any other Original
Head Lessee Transaction Documents;
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<PAGE> 42
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease);
(6) on the Delivery Date, the Owner Trustee
received good title to the Aircraft free and clear of all
Liens, except the rights of the Original Head Lessee under the
Original Lease, the rights of the Sublessee under the
Sublease, the Lien of the Original Indenture, the beneficial
interest of the Owner Participant in the Aircraft, and
Permitted Liens under the Original Lease;
(7) title to the Buyer Furnished Equipment for the
Aircraft has been transferred to the Owner Trustee in
accordance with Section 8(y) of the Participation Agreement.
As of the Restatement Date, there are no existing Claims
against Parent Guarantor or Original Head Lessee with respect
to Buyer Furnished Equipment; and
(8) except for the registration of the Aircraft
pursuant to the Federal Aviation Act, the filing for
recordation pursuant to the Federal Aviation Act (with
confidential financial terms redacted) of Lease Amendment No.
1, the Amended and Restated Lease, Lease Supplement No. 2,
Trust Supplement No. 2, the First Amended and Restated
Indenture and Indenture Supplement No. 2, and each of the
other documents referred to in Annex A hereto, all with the
FAA, the filing of a Uniform Commercial Code ("UCC") amended
financing statement with the Secretary of State of the State
of Delaware with regard to the Original Lease, the filing of
UCC termination statements with regard to the Original Head
Lessee with the Secretary of State of the States of New York,
Connecticut and Arizona, the filing of a protective UCC
financing statement with the Secretary of State of the State
of Arizona with respect to the Lease, the filing of a UCC
termination statement with the Secretary of State of the State
of Arizona with respect to the Sublease, and the filing of a
UCC termination statement with the Secretary of State of the
State of Delaware with respect to the Initial Sublease
Assignment (as defined in the Original Lease) all of which
financing and termination statements shall have been duly
effected as of the Restatement Date (and assignments thereof
and continuation statements at periodic intervals), and other
than the taking of possession by the Indenture Trustee of the
original counterparts of the Original Lease, Lease Amendment
No. 1, the Amended and Restated Lease, and all Lease
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<PAGE> 43
Supplements thereto (to the extent the Lease constitutes
chattel paper), and the placing of the Lease identification
required by Section 6(e) of the Lease, no further filing or
recording of the Lease or of any other document (including any
financing statement under Article 9 of the UCC of the State of
Delaware, New York or Arizona) and no further action is
necessary, under the laws of the United States of America or
the States of Delaware, New York and Arizona in order to
perfect the Owner Trustee's interest in the Aircraft as
against the Lessee and any third parties, or to perfect the
security interest in favor of the Indenture Trustee in the
Owner Trustee's interest in the Aircraft and in the Lease.
(g) The Parent Guarantor represents and warrants that:
(1) it is duly organized and validly existing under
the laws of Ireland and has the corporate power and authority
to enter into and to perform its obligations under this
Agreement; this Agreement has been duly authorized and
constitutes the legal, valid and binding obligations of the
Parent Guarantor enforceable against it in accordance with its
terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a
proceeding at law or in equity;
(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
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<PAGE> 44
thereunder) is or was required, as the case may be, for the
due execution, delivery or performance by the Parent Guarantor
of this Agreement;
(4) except as set forth in the Parent Guarantor's
most recent Form 20-F filed with the Commission, there are no
pending or, to its knowledge, threatened actions or
proceedings against the Parent Guarantor before any court or
administrative agency or arbitrator which, if determined
adversely to the Parent Guarantor, would materially adversely
affect the Parent Guarantor's ability to perform its
obligations under this Agreement;
(5) on the Restatement Date, the Trust Estate, the
Aircraft, the Airframe, each Engine and each Part shall be
free and clear of any and all Sublessor's Liens (as defined in
the Sublease); and
(6) The representations and warranties of the
Original Head Lessee contained in this Agreement are true and
correct in all respects on the date made (provided that the
representation and warranty with respect to Section 9(f)(8)
shall be only for the benefit of the Lessee).
SECTION 10. Transfer of Owner Participant's Interest. Owner
Participant shall not (i) 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 (ii) sell, transfer or otherwise dispose of (in one or
more related transactions) all or more than 75% of its property or assets
(based on the book value of such property and assets) unless such sale,
transfer or other disposition is made at the end of the lease term for any such
property or assets; provided that, subject to the conditions set forth below,
(1) 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 and (2) Owner Participant may
sell, transfer or otherwise dispose of all or substantially all of its property
or assets in a manner that would otherwise be prohibited by clause (ii) above
if, prior to any such sale, transfer or other disposition, Owner Participant
transfers to a Transferee (as defined below) all (but not less than all) of its
right (except for such rights accruing
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<PAGE> 45
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; and provided
further, that, so long as [________________] shall be the Owner Participant
hereunder, nothing in this Section 10 shall restrict the right of any partner
of [_________________] to sell, assign, convey or otherwise transfer any of its
right, title or interest in [_______________]. 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 financial
institution with a combined capital, surplus and undivided profits of,
or a corporation with a tangible net worth of, in either case at least
$60,000,000, (B) any partnership in which such bank, trust company,
financial institution, or corporation (or a direct or indirect
subsidiary of such bank, trust company, financial institution or
corporation) is a general partner 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, trust company, financial institution or
corporation guaranteeing such partnership'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, (C) any direct or indirect 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, trust company, 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 (D) an Affiliate or a subsidiary of Owner
Participant if Owner Participant furnishes to Owner Trustee, Indenture
Trustee, Original Head Lessee and Lessee an agreement whereby Owner
Participant will guarantee such Affiliate's or subsidiary's
obligations as Owner Participant contained in this Agreement, the
Trust Agreement, the Amended and Restated Head Lease TIA and each
other Operative Document to
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<PAGE> 46
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 (vii) below; provided
that if such Transferee is an Affiliate or 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 guarantee 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 such 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 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 any
thereof or other similar Person;
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<PAGE> 47
(viii) 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), (C) or (D) above, if any, is the legal,
valid, binding and enforceable obligation of the Transferee's
guarantor shall be provided, at least 3 days prior to such transfer,
to Lessee, Owner Trustee, Original Head Lessee and Indenture Trustee,
which shall be in form and substance reasonably satisfactory to each
of them; and
(x) the terms of the Operative Documents and the Amended
and Restated Head Lease TIA shall not be altered.
Upon any such transfer, except as the context otherwise requires, such
Transferee shall be deemed "Owner Participant" for all purposes hereof and of
the Trust Agreement, the Amended and Restated Head Lease TIA and each other
Operative Document to which Owner Participant is a party or by which Owner
Participant is bound, and shall be deemed to have made the original
participation in the Aircraft previously made by Owner Participant; and except
as the context otherwise requires, each reference in this Agreement, the Trust
Agreement, the Amended and Restated Head Lease TIA and each other Operative
Document to "Owner Participant" shall thereafter be deemed to include such
Transferee as provided in this Section 10. No transfer shall release Owner
Participant from its obligations hereunder, under the Trust Agreement, 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 Trust Agreement or the Amended and Restated Head Lease TIA by or
against Owner Participant which have accrued or been made prior to the date of
such transfer. The transferor Owner Participant shall pay the reasonable
expenses of each party hereto related to any such transfer.
Each party hereto agrees, upon the request of Owner
Participant, to use reasonable efforts to cooperate at no cost or expense to it
with Owner Participant in complying with its obligations under the provisions
of clause (A) of paragraph (6) of Section 9(c), provided that such cooperation
shall not be subject to the indemnity in Section 13 of the Lease. The Lessee
shall have no obligation to prevent any such deregistration or assist in
maintaining or otherwise enhancing the Aircraft's eligibility for registration
by restricting the use of the Aircraft.
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<PAGE> 48
SECTION 11. Re-Registration of the Aircraft. The Indenture
Trustee agrees, that if the Owner Participant consents thereto, which consent
shall not be unreasonably withheld, at any time after the Restricted Use
Period, Lessee may, in connection with effecting a Permitted Sublease elect to
effect a change in registration of the Aircraft, at Lessee's cost and expense,
so long as (a) the country of registry of the Aircraft is a country listed on
Exhibit C hereto (or such other country as the Owner Participant approves) and
(b) the following conditions are met: (i) unless the country of registry is
Taiwan, the United States of America maintains normal diplomatic relations with
the country of registry of the Aircraft, and if the country of registry is
Taiwan, the United States of America maintains diplomatic relations at least as
good as those in effect on the Restatement Date; and (ii) the Owner Trustee,
the Owner Participant and the Indenture Trustee shall have received favorable
opinions (subject to customary exceptions) addressed to each such party, from
counsel of recognized reputation qualified in the laws of the relevant
jurisdiction and reasonably acceptable to the Owner Participant to the effect
of the following and as to such other matters as the Owner Participant may
reasonably request:
(A) the Owner Trustee's ownership interest in the
Aircraft and interest in the Lease and any Permitted Sublease shall be
recognized under the laws of such jurisdiction,
(B) the obligations of Lessee, and the rights and
remedies of the Owner Trustee, under the Lease shall remain valid,
binding and (subject to customary bankruptcy and equitable remedies
exceptions and to other exceptions customary in foreign opinions
generally) enforceable under the laws of such jurisdiction (or the
laws of the jurisdiction to which the laws of such jurisdiction would
refer as the applicable governing law),
(C) after giving effect to such change in registration,
the Lien of the Indenture on the Owner Trustee's right, title and
interest in and to the Aircraft, the Lease and any Permitted Sublease
shall continue as a valid and duly perfected security interest (and
will not adversely affect the validity of the opinions stated in
paragraphs 5(a) and 5(b) of the opinion letter delivered by
Freshfields on the Restatement Date in connection with the
transactions contemplated by this Agreement) and all filing, recording
or other action necessary to protect the same and the Owner Trustee's
ownership interest in the Aircraft shall have been accomplished (or,
if such opinion cannot be given at the time of such proposed change in
registration because such change in registration is not yet effective,
(1) the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture
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<PAGE> 49
Trustee shall have received a certificate from Lessee that all
possible preparations to accomplish such filing, recording and other
action shall have been done, and such filing, recording and other
action shall be accomplished and a supplemental opinion to that effect
shall be delivered to the Owner Trustee and the Indenture Trustee on
or prior to the effective date of such change in registration),
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to any other activity
of the Owner Trustee, the Owner Participant or the Indenture Trustee
(or any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction,
(E) there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such jurisdiction
(it being agreed that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk),
(F) (unless Lessee shall have agreed, or pursuant to the
Lease shall have been required, to provide insurance covering the risk
of requisition of use of such Aircraft by the government of such
jurisdiction so long as such Aircraft is registered under the laws of
such jurisdiction) the laws of such jurisdiction require fair
compensation by the government of such jurisdiction payable in
currency freely convertible into Dollars for the loss of use of such
Aircraft in the event of the requisition by such government of such
use.
In addition, as a condition precedent to any such change in registration, (i)
the insurance required by Section 12 of the Lease shall be in full force and
effect at the time of such change in registration after giving effect to such
change in registration and the Owner Trustee and the Indenture Trustee shall
have received a certificate of the type described in Section 12(f) of the
Lease, and (ii) the aircraft maintenance standards of the new country of
registry shall be not materially less stringent from those of the United States
of America or not materially less stringent from those of the United Kingdom
and the Owner Trustee and the Indenture Trustee shall have received a
certificate to such effect signed by the President, any Executive Vice
President or any Senior Vice President of Lessee which certificate shall, as
among the parties hereto, be presumed to be correct as to the matters stated
therein absent conclusive evidence to the contrary. Lessee shall pay all
reasonable costs, expenses, fees, and recording and registration taxes,
including
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the reasonable fees and expenses of counsel to the Owner Trustee, the Owner
Participant and the Indenture Trustee, and other charges in connection with any
such change in registration.
SECTION 12. Quiet Enjoyment. Each of the Trust Company,
Owner Trustee, Owner Participant (as to itself and as to Owner Trustee),
Indenture Trustee in its individual capacity and as Indenture Trustee and on
behalf of the Note Holders, the Pass Through Trustee and the Subordination
Agent severally covenants and agrees that during the Term, so long as no Lease
Event of Default shall have occurred and be continuing and the Lease shall not
have been declared or deemed in default, no action shall be taken or caused to
be taken by it or a Person lawfully claiming by, through or on behalf of it to
interfere with the right of Lessee or any Permitted Sublessee to the
possession, use, operation and quiet enjoyment of and other rights with respect
to the Aircraft under the Lease, and all rents, revenues, profits and income
therefrom, in accordance with the terms of the Lease; provided that the Trust
Company, Owner Trustee and Owner Participant shall not be liable for any such
interference by Indenture Trustee, Pass Through Trustee, holders of any
Equipment Notes, or any other Person lawfully claiming by, through or on behalf
of them.
SECTION 13. Liens. Each of the Trust Company, Owner Trustee
and Owner Participant severally covenants and agrees with each other party
hereto that it shall not cause or permit to exist a Lessor's Lien or Head
Lessor's Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate or the Indenture Estate. Each of Trust Company,
Owner Trustee and Owner Participant severally agrees that it will promptly, at
its own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Lessor's Lien or Head Lessor's Lien attributable to it and to make restitution
to the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and
each Indemnitee against any claims incurred or suffered by any such Person and
any reduction in amounts payable out of, or diminution in the assets of, the
Trust Estate or the Indenture Estate resulting from any such Lessor's Lien or
Head Lessor's Lien attributable to it. For all purposes of this Agreement and
the other Operative Documents, any Lessor's Lien or Head Lessor's Lien arising
as a result of the nonpayment of any Tax imposed on or measured by the net
income of the Trust Estate or the trust created by the Trust Agreement that is
not indemnifiable by Lessee or Original Head Lessee shall be deemed to be
attributable to Owner Participant, and Owner Participant shall be responsible
for all Lessor's Liens attributable to Owner Participant and Owner Trustee.
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Each of the Indenture Trustee, Pass Through Trustee and
Subordination Agent severally covenants and agrees with each other party hereto
that it shall not cause or permit to exist a Trustee's Lien (as defined below)
attributable to it with respect to the Aircraft or any other portion of the
Trust Estate or the Indenture Estate. Each of Indenture Trustee, Pass Through
Trustee and Subordination Agent severally agrees that it will promptly, at its
own expense (and without any right of indemnification or reimbursement from
Lessee), take such action as may be necessary duly to discharge any such
Trustee's Lien attributable to it and to make restitution to the Trust Estate
and the Indenture Estate for any diminution of the assets thereof resulting
therefrom and will indemnify and hold harmless Lessee and each Indemnitee
against any claims incurred or suffered by any such Person and any reduction in
amounts payable out of, or diminution in the assets of, the Trust Estate or the
Indenture Estate resulting from any such Trustee's Lien attributable to it.
For purposes of this paragraph, "Trustee's Lien" means any Lien or disposition
of title attributable to Indenture Trustee in its individual capacity (and not
as Indenture Trustee), Pass Through Trustee in its individual capacity (and not
as Pass Through Trustee) or Subordination Agent in its individual capacity (and
not as Subordination Agent) on or in respect of (as the case may be) the
Aircraft or any other portion of the Trust Estate or the Trust Indenture Estate
arising as a result of (i) Claims against such Person not related to its
interest in the Aircraft or the administration of the Trust Estate or the Trust
Indenture Estate pursuant to the Indenture, whether under Section 9-207(2)(e)
of the Uniform Commercial Code or otherwise, (ii) acts or omissions of such
Person not contemplated hereunder or under the other Operative Documents, or
acts or omissions of such Person which are in violation of any of the Operative
Documents, (iii) Taxes imposed on or Claims against such Person which are
excluded from indemnification by Lessee, or (iv) Claims against such Person
arising out of the voluntary or involuntary transfer by such Person of all or
any portion of its interest in the Aircraft, the Airframe, any Engine, the
Trust Estate, the Trust Indenture Estate or the Operative Documents (except a
Claim resulting from the exercise of remedies under and in accordance with the
Indenture or for a transfer provided for in the Operative Documents).
Each of the Original Head Lessee and Parent Guarantor jointly
and severally covenants and agrees with each other party hereto that it shall
not cause or permit to exist a Sublessor's Lien (as defined in the Sublease)
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect
with respect to the Aircraft or any other portion of the Trust Estate or the
Indenture Estate. Each of the Original Head Lessee and Parent Guarantor
severally agrees that
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it will promptly, at its own expense (and without any right of indemnification
or reimbursement from Lessee), take such action as may be necessary duly to
discharge any such Sublessor's Lien attributable to it or other Lien or
disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect and to make restitution to
the Trust Estate and the Indenture Estate for any diminution of the assets
thereof resulting therefrom and will indemnify and hold harmless Lessee and
each Indemnitee against any claims incurred or suffered by any such Person and
any reduction in amounts payable out of, or diminution in the assets of, the
Trust Estate or the Indenture Estate resulting from any such Sublessor's Lien
attributable to it or other Lien or disposition of title created by or through
Original Head Lessee, Parent Guarantor or any Affiliate of either thereof which
would have constituted a Sublessor's Lien had the Sublease remained in effect.
In no event will Lessee be liable for any Claims resulting
from, pertaining to, arising from, or related to the granting, creation or
existence of a Lessor's Lien, a Head Lessor's Lien, a Lenders' Lien, or a
Sublessor's Lien (including, without limitation, Claims against Lessor and
Original Head Lessee with respect to Buyer Furnished Equipment) or other Lien
or disposition of title created by or through Original Head Lessee, Parent
Guarantor or any Affiliate of either thereof which would have constituted a
Sublessor's Lien had the Sublease remained in effect.
The Parent Guarantor covenants and agrees that it shall cause
the Original Head Lessee to perform its obligations under this Section 13.
SECTION 14. Certain Additional Provisions Relating to
Original Head Lessee, Parent Guarantor, Trust Company, Owner Trustee and Owner
Participant. (a) Each of Owner Participant and Trust Company hereby agrees
with Lessee and Indenture Trustee (i) to comply with the terms of the Trust
Agreement, (ii) not to amend, supplement, or otherwise modify the Trust
Agreement except in accordance with the terms thereof, provided that any such
amendment, supplement or modification shall not adversely affect the Lessee or
the Lien of the Indenture, and (iii) not to terminate or revoke the Trust
Agreement except in accordance with the terms thereof, provided that any such
termination or revocation shall not adversely affect the Lessee or the Lien of
the Indenture.
(b) Notwithstanding anything to the contrary in the Trust
Agreement or Section 14(a) hereof, but subject always to the provisions of
Section 14(c) hereof, Owner Participant shall not consent to or direct a change
in the situs of the Trust
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Estate so long as a successor Owner Trustee meeting the requirements of the
Trust Agreement is reasonably available at the present situs of the Trust
Estate (A) unless the Indenture Trustee, the Original Head Lessee and Lessee
shall have been given 30 days' prior notice thereof and (B) if, within 15 days
after notice of such a proposed change is given to Lessee and the Original Head
Lessee, either (1) Lessee or Original Head Lessee delivers to Owner Participant
and Owner Trustee (at the expense of Owner Participant) an opinion of counsel,
which counsel shall be reasonably satisfactory to Owner Participant and Owner
Trustee, to the effect that such proposed change in the situs of the Trust
Estate would have an adverse effect on the rights or obligations of Lessee or
Original Head Lessee or (2) Lessee or Original Head Lessee delivers to Owner
Participant and Owner Trustee (at the expense of Owner Participant) an opinion
of counsel, which counsel shall be reasonably satisfactory to Owner Participant
and Owner Trustee, to the effect that such proposed change in the situs of the
Trust Estate would cause an increase in the amount for which Lessee may be
required to indemnify any Person pursuant to the provisions of Section 10 of
the Lease or for which Original Head Lessee is required to indemnify any Person
pursuant to the provisions of the Amended and Restated Head Lease TIA, unless
any and all Persons entitled to indemnification pursuant to Section 10 of the
Lease or applicable provision of the Amended and Restated Head Lease TIA shall
waive indemnification under Section 10 of the Lease or applicable provision of
the Amended and Restated Head Lease TIA for any adverse tax or other
consequences to it of such a change in the situs of the Trust Estate, (C)
unless Indenture Trustee receives from Owner Participant an opinion of counsel,
which counsel shall be reasonably satisfactory to Indenture Trustee, to the
effect that such proposed change in the situs of the Trust Estate would not
have an adverse effect on the validity or priority of the Lien of the Indenture
and that such Uniform Commercial Code and FAA filings as are required to
maintain the validity and priority of the Lien of Indenture have been made, and
(D) such change does not affect the registration of the Aircraft.
(c) Owner Participant agrees that if, at any time, the Trust
Estate has become, or in Lessee's good faith opinion will become, subject to
any Taxes for which it is indemnified pursuant to Section 10 of the Lease and
if, as a consequence thereof, Lessee should request that the situs of the trust
be moved to another state in the United States of America from the state in
which it is then located, the situs of the trust shall be moved and Owner
Participant will take whatever action may be requested by Lessee that is
reasonably necessary to accomplish such removal; provided that (A) Lessee shall
provide such additional tax indemnification with respect to such change of
situs and request of Lessee as Original Head Lessee, Owner Participant or the
Indenture Trustee (subject to the exclusions set forth in Section 10(b) of the
Lease and the exclusions in the Amended and
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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 will not be adversely affected by such action, and that such
Uniform Commercial Code and FAA filings as are required to maintain the
validity and the priority of the Lien of the Indenture have been made, (D)
Owner Participant and Indenture Trustee shall have received an opinion or
opinions of counsel selected by Owner Participant to the effect that, with
customary exceptions, (I) the trust, as thus removed, shall remain a validly
established trust, (II) any amendments to the Trust Agreement or the Indenture
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the legal, valid and
binding obligations of such parties, enforceable in accordance with their
terms, (III) if such removal involves the replacement of Owner Trustee, an
opinion of counsel to such successor Owner Trustee in form and substance
reasonably satisfactory to Indenture Trustee and to Owner Participant covering
the matters described in the opinion described in Section 3(j) hereof, and (IV)
covering such other matters as Owner Participant or the Indenture Trustee may
reasonably request, and (E) Lessee shall indemnify and hold harmless on an
after tax basis Owner Trustee, Owner Participant and their respective
Affiliates and Indenture Trustee against any and all reasonable and actual
costs and expenses including reasonable attorneys' fees and disbursements,
registration, recording or filing fees and other Taxes incurred by Owner
Trustee, Owner Participant and their respective Affiliates, or Indenture
Trustee in connection with such change of situs and shall indemnify and hold
harmless Owner Participant, Owner Trustee and their respective Affiliates, and
Indenture Trustee on an after tax basis (subject to the exclusions set forth in
Section 10(b) of the Lease and the Amended and Restated Sublease TIA) from and
against any increase in Taxes borne by such Person that results from such
change in situs. In no event shall any change in situs of the trust affect
Original Head Lessee's rights or obligations under the Amended and Restated
Head Lease TIA.
(d) Owner Trustee or any successor may resign or be removed
by Owner Participant, a successor Owner Trustee may be appointed, and a
corporation may become Owner Trustee under the Trust Agreement, only in
accordance with the provisions of Article X of the Trust Agreement. Owner
Participant agrees promptly to appoint a successor Owner Trustee in the event
that Owner Participant has actual knowledge that Owner Trustee is not in
compliance with its covenants contained herein. No successor Owner Trustee
shall be appointed unless Lessee and Indenture
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Trustee shall have given written consent thereto, which consent shall not be
unreasonably withheld. Owner Participant will not instruct Owner Trustee to
terminate any Operative Document or take any action thereunder in violation of
the terms thereof. Owner Participant shall not transfer any interest in the
Trust Estate except in compliance with Section 10 hereof and the Trust Company
shall not permit Owner Trustee to engage in any business other than owning and
leasing the Aircraft as contemplated hereby. Lessee shall pay expenses on an
after tax basis relating to the resignation or, if requested by Lessee, the
removal of Owner Trustee, provided that the Owner Participant shall pay
expenses relating to the removal of the Owner Trustee, if such removal was
solely at the request of the Owner Participant.
(e) The Trust Company agrees that if at any time it shall
obtain actual knowledge that it has ceased to be or will likely cease to be a
Citizen of the United States, it will promptly resign as Owner Trustee (if and
so long as such citizenship is necessary under such Federal Aviation Act or any
other law to permit the continued registration of the Aircraft in the name of
the Lessor or, if it is not necessary, if and so long as Owner Trustee's
citizenship would have any material adverse effect on any holder of Equipment
Notes, the Lessee or any Permitted Sublessee), effective upon the appointment
of the successor Owner Trustee in accordance with Section 10.1 of the Trust
Agreement.
(f) The Owner Participant hereby instructs the other
parties hereto to deal directly with the Managing Partner as managing partner
of the Owner Participant and the Owner Participant agrees that the other
parties hereto will be entitled to rely conclusively on any consent, waiver,
approval or other action taken by the Managing Partner as managing partner of
the Owner Participant.
SECTION 15. Certain Retained Rights and Releases. (a) Each
of Owner Trustee, Indenture Trustee, Lessee and Owner Participant hereby agrees
and consents to and confirms that it is bound by the terminations, assignments,
delegations, releases and amendments set forth in or contemplated by Lease
Amendment No. 1 and the Amended and Restated Lease.
(b) Each of Parent Guarantor, Original Head Lessee and
Lessee agree as among themselves that the following rights, benefits,
obligations and liabilities (such rights, benefits, obligations and liabilities
are, collectively, the "Retained Sublease Rights and Obligations"), shall
survive the termination of the Sublease and the Sublease Guaranty: (i) Lessee,
Original Head Lessee and Parent Guarantor shall retain all rights, benefits,
obligations and liabilities under the Sublease, including that Sublessee shall
remain liable for all of its obligations under Sections 10 and 13 of the
Sublease, with
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respect to the period up to (but excluding) the Restatement Date and each of
Parent Guarantor, Original Head Lessee and Lessee shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination or expiration thereof (including, without
limitation, any such liability arising from and including the Restatement Date
under the Sublease in respect of the period up to (but excluding), or acts or
omissions or circumstances arising prior to (but excluding), the Restatement
Date), (ii) all rights, benefits, obligations and liabilities under the
Sublease TIA (which rights, benefits, obligations and liabilities are amended
and restated as of the Restatement Date) and (iii) Original Head Lessee and
Parent Guarantor shall remain liable to Sublessee under the Sublease and the
Sublease Guaranty for Sublessor's Liens (as therein defined); all of which
rights, benefits, obligations and liabilities shall expressly survive the
termination of the Sublease and the Sublease Guaranty. In furtherance of the
foregoing, it is agreed that (x) Original Head Lessee shall continue to be
liable to the Sublessee as and to the extent provided hereunder for removal of
Sublessor's Liens and (y) Parent Guarantor is hereby released from any and all
obligations and liabilities under the Sublease Guaranty, other than in respect
of the obligations and liabilities of the Original Head Lessee in respect of
Sublessor's Liens as provided above.
(c) Each of the Lessee, Owner Trustee and Owner
Participant agree as among themselves that the following rights, benefits,
obligations and liabilities shall survive the termination of the Sublease:
Lessee, and Owner Trustee, Owner Participant and the other "Indemnitees" (as
such term is defined in the Sublease) other than Original Head Lessee and
Parent Guarantor, shall retain all rights, benefits, obligations and
liabilities under the Sublease, including that Sublessee shall remain liable
for all of its obligations under Sections 10 and 13 of the Sublease, with
respect to the period up to (but excluding) the Restatement Date and each of
Lessee, Owner Trustee and Owner Participant shall retain all rights and
liabilities under any provision of the Sublease which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising on or after the Restatement Date under the Sublease in
respect of the period up to (but excluding), or acts or omissions or
circumstances arising prior to (but excluding), the Restatement Date), all of
which rights, benefits, obligations and liabilities shall expressly survive the
termination of the Sublease. In furtherance of the foregoing, it is agreed by
Sublessee that the indemnities contained in Sections 10 and 13 of the Sublease
are expressly made for the benefit of and shall be enforceable by each
Indemnitee (as such term is defined in the Sublease).
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(d) Except with respect to the Sublease and the Sublease
TIA to the extent provided in Section 15(b) and (c) hereof, it is expressly
understood and agreed by each of the parties hereto that the Original Head
Lessee and the Parent Guarantor shall, as of the Restatement Date, have no
liabilities or obligations under the "Operative Documents" (as defined in the
Original Head Lease as in effect immediately prior to (but excluding) the
Restatement Date and excluding the Head Lease TIA (which rights, benefits,
obligations and liabilities are amended and restated as of the Restatement
Date)) and are released from all such obligations and liabilities, except the
Original Head Lessee and the Parent Guarantor pursuant to the Parent Head Lease
Guaranty (i) shall continue to be liable to the parties hereto for the removal
of any Sublessor's Liens and (ii) (without releasing Sublessor as provided in
the Sublease) each of the Original Head Lessee, the Parent Guarantor, the Owner
Trustee, the Indenture Trustee and the Owner Participant agree as among
themselves and for the benefit of the other "Indemnitees" (as such term is
defined in the Original Head Lease) that all rights, benefits, obligations and
liabilities under Sections 7(c) and 7(d) of the Participation Agreement with
respect to the period up to (but excluding) the Restatement Date and under any
other provision of the Participation Agreement which by the express terms
thereof survives the termination thereof (including, without limitation, any
such liability arising from and including the Restatement Date under the
Participation Agreement in respect of the period up to (but excluding), or acts
or omissions or circumstances arising prior to (but excluding), the Restatement
Date) shall survive the termination of the Participation Agreement, the
Original Head Lease and the Parent Head Lease Guaranty (the foregoing surviving
rights, benefits, obligations and liabilities of Parent Guarantor and Original
Head Lessee, are, collectively, the "Retained Head Lease Rights and
Obligations"). In furtherance of the foregoing, the parties hereto consent and
agree that the Parent Guarantor is hereby released from any and all
"Obligations" under and as defined in the Parent Head Lease Guaranty, except in
respect of the Retained Head Lease Rights and Obligations and except in respect
of the Amended and Restated Head Lease TIA, the "Obligations" in respect of
which shall continue in full force and effect in accordance 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 (the provisions of which are hereby
incorporated herein) to which it
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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, 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 c/o GPA Corporation at 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
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Indenture Trustee. Owner Participant generally consents to service of process
by registered mail, return receipt requested, addressed to it c/o
[______________________________] 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, 15th Floor, New
York, New York 10001 or such other office of Indenture Trustee as from time to
time may be designated in writing to Owner Participant, Original Head Lessee,
Owner Trustee and Lessee.
(c) Judgments. A final judgment (the enforcement of
which has not been stayed) against Owner Participant, Owner Trustee, Lessee,
Original Head Lessee, Parent Guarantor and Indenture Trustee obtained in any
suit in the court of the State of New York in New York County or in the United
States District Court for the Southern District of New York shall be
conclusive, and, to the extent permitted by applicable law, may be enforced in
other jurisdictions by suit on the judgment, a certified or true copy of which
shall be conclusive evidence of the fact and of the amount of any indebtedness
or liability of Lessee therein described; provided that the plaintiff at its
option may bring suit, or institute other judicial proceedings against, Lessee
or any of its assets in the courts of any country or place where Lessee or such
assets may be found.
SECTION 19. Limitation on Recourse. The provisions of
Section 2.03(a) of the Indenture are hereby incorporated herein by reference
mutatis mutandis as fully and with the same force and effect as if set forth in
full.
SECTION 20. Notices. Unless otherwise specifically provided
herein, all notices required or permitted by the terms of this Agreement shall
be in English and in writing, and shall be sent to the Original Head Lessee,
the Parent Guarantor, the 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,
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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 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)
Kelley Drye & Warren LLP, special counsel for the Indenture Trustee,
(B) Shipman & Goodwin LLP, special counsel for the Pass Through
Trustee and the Subordination Agent, (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 Underwriter;
(2) the reasonable fees, expenses and disbursements of
White & Case, special counsel for the Owner Participant;
(3) the reasonable 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
- 57 -
<PAGE> 61
Provider shall be a third party beneficiary of each of the representations and
warranties made herein by such party, and that the Liquidity Provider may rely
on such representations and warranties to the same extent as if such
representations and warranties were made to the Liquidity Provider directly.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns.
SECTION 23. Miscellaneous. (a) Provided that the
transactions contemplated hereby have been consummated, and except as otherwise
provided for herein, the representations and warranties herein of the Original
Head Lessee, the Parent Guarantor, the Lessee, the Owner Trustee, the Indenture
Trustee, the Owner Participant, the Subordination Agent and the Pass Through
Trustee shall survive the execution and delivery of this Agreement. This
Agreement may be executed in any number of counterparts (and each of the
parties hereto shall not be required to execute the same counterpart). Each
counterpart of this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this Agreement, but all
of such counterparts together shall constitute one instrument. Neither this
Agreement nor any of the terms hereof may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by each
party hereto; and no such termination, amendment, supplement, waiver or
modification shall be effective unless a signed copy thereof shall have been
delivered to each party hereto. The index preceding this Agreement and the
headings of the various Sections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof. The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the Original Head Lessee and its successors and
permitted assigns, the Parent Guarantor and its successors and permitted
assigns, the Lessee and its successors and permitted assigns, the Pass Through
Trustee and its successors as Pass Through Trustee (and any additional trustee
appointed) under any of the Pass Through Trust Agreements, the Indenture
Trustee and its successors as Indenture Trustee (and any additional Indenture
Trustee appointed) under the Indenture, the Subordination Agent and its
successors as Subordination Agent under the Intercreditor Agreement, the Owner
Trustee and its successors as Owner Trustee under the Trust Agreement, and the
Owner Participant and its successors and permitted assigns. No purchaser or
holder of any Equipment Notes shall be deemed to be a successor or assign of
any holder of the Original Certificates.
(b) Upon the release of the Aircraft from the lien of the
Indenture and the termination of the Indenture pursuant to and in accordance
with Section 10.01 thereof, each requirement in the Operative Documents that
the consent of Indenture Trustee be
- 58 -
<PAGE> 62
obtained or that the Indenture Trustee be given notice shall be of no further
force and effect.
(c) The Lessee agrees for the express benefit of the
Indenture Trustee to perform its obligations under Section 8(k) of the Lease.
(d) The parties hereto agree for the benefit of the
Lessee that the Lessee can rely on the options, elections, determinations,
consents, approvals, waivers and notices given, exercised or made by the Owner
Trustee under the Lease to the extent reserved to the Owner Trustee pursuant to
Section 5.10(d) of the Indenture.
(e) Notwithstanding anything to the contrary in any
Operative Document, the parties hereto hereby agree that the Put Termination
Agreement and the Deed of Indemnity (as such terms are defined herein) shall
not constitute Operative Documents or Financing Documents.
SECTION 24. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
SECTION 25. Effectiveness. The parties hereto agree that
this Agreement shall be effective among all such parties on and as of the
Restatement Date.
- 59 -
<PAGE> 63
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.
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
<PAGE> 64
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner
Trustee
By:
-----------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
Attention: Corporate Trust
Administration
[_____________________________]
By:
------------------------------------
Name:
Title:
Address:
Telephone:
Telecopier:
Attention:
<PAGE> 65
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as otherwise
provided herein, but solely as Indenture
Trustee
By:
------------------------------------
Name: Andrew M. Deck
Title: Vice President
Address: 450 West 33rd Street
15th Floor
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: Philip G. Kane, Jr.
Title: Vice President
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: Philip G. Kane, Jr.
Title: Vice President
Address: 777 Main Street
CTMO 0238
Hartford, Connecticut
06115
Telephone: (860) 986-4545
Telecopier: (860) 986-7920
Attention: Corporate Trust
Administration
<PAGE> 66
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1A, dated June ___, 1997.
2. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1B, dated June ___, 1997
3. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1C, dated June ___, 1997.
4. Pass Through Trust Agreement, dated as of June ___, 1997 between
America West Airlines, Inc. and Fleet National Bank, as supplemented
by Trust Supplement No. 1997-1D, dated June ___, 1997.
<PAGE> 67
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> 68
SCHEDULE III to
Refunding Agreement
HOLDERS OF EQUIPMENT NOTES
Payment Instructions
Fleet National Bank, 777 Main Street, Hartford, Connecticut 06115, Attn: Philip
Kane, Corporate Trust Administration, Ref. AWA, for the account of Fleet
National Bank Account No. ABA # ______________________, ACCT. #
________________________.
<PAGE> 69
EXHIBIT A to
REFUNDING AGREEMENT
TRANSFEREE'S PARENT GUARANTEE
[GPA 1989 BN-11]
TRANSFEREE'S PARENT GUARANTEE [GPA 1989 BN-11], 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, [_______________] ("Transferor"), is the Owner
Participant under that certain Refunding Agreement [GPA 1989 BN-11], dated as
of June ___, 1997 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> 70
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> 71
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 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.
- 3 -
<PAGE> 72
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 (or any of them) against the Transferee
- 4 -
<PAGE> 73
under any Operative Document, such Beneficiary (or any assignee thereof) shall
be entitled to receive hereunder from the Guarantor, upon demand therefor, the
sums that would have otherwise been due from the Transferee had such remedies
been able to be exercised.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must otherwise be
restored or returned by any Beneficiary upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Transferee or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Transferee or the
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made. The Guarantor shall not commence any "case"
(as defined in Title 11 of the United States Code) against the Transferee.
8. Payments. The Guarantor hereby guarantees that
payments hereunder shall be paid without set-off, counterclaim, deduction or
withholding, and shall be made in U.S. Dollars. If any payment hereunder is
subject to deduction or withholding, Guarantor shall pay an additional amount
such that, after deduction of all amounts required to be deducted or withheld,
the net amount actually received will equal the amount that would have been
received had such deduction or withholding not been required.
9. Representations and Warranties. The Guarantor hereby
represents and warrants that:
(a) the Guarantor is a [type of legal personality] duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its [organization] 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;
- 5 -
<PAGE> 74
(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](1)
(h) the Guarantor is [type of legal personality] with a
[combined capital, surplus and undivided profits] [tangible net worth]
of at least $60,000,000.
10. Severability. Any provision of this Guarantee that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the
- ---------------------------
(1) This representation is not applicable if Transferee is a
wholly-owned subsidiary of the Owner Participant.
- 6 -
<PAGE> 75
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 pre-paid, or, in the case of telegraphic notice, when sent, answerback
received, addressed to (a) in the case of the
- 7 -
<PAGE> 76
Guarantor, the address provided on the signature page hereof, and (b) in the
case of any Beneficiary, the address provided for such party in the Refunding
Agreement.
- 8 -
<PAGE> 77
IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and the year first above written.
[NAME OF GUARANTOR]
By:
---------------------------------
Title:
- 9 -
<PAGE> 78
EXHIBIT B to
REFUNDING AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
[GPA 1989 BN-11]
ASSIGNMENT AND ASSUMPTION AGREEMENT [GPA 1989 BN-11]
("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 June ___, 1997, among America 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, [_______________], as Owner Participant, Fleet National Bank,
as Subordination Agent, and The Chase Manhattan Bank, as Indenture Trustee, as
amended, modified or supplemented from time to time (the "Refunding
Agreement"), (ii) the Trust Agreement identified in the Refunding Agreement,
(iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Amended
and Restated Head Lease TIA identified in the Refunding Agreement, (v) the
Lease, (vi) the proceeds therefrom and (vii) 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
Lease, 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 (collectively, the "Relevant Documents"), except such rights
of Assignor as have accrued to Assignor prior to the date
<PAGE> 79
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, the Amended and Restated Head Lease TIA 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 Relevant Documents to which Owner Participant is a party and
any of the other Relevant 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 Relevant 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 Relevant 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 Relevant Documents to which Owner Participant is a party or under any
of the other Relevant 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 Relevant
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
- 2 -
<PAGE> 80
reasonably deem advisable. Assignor hereby acknowledges that this appointment
is coupled with an interest and is irrevocable by Assignor in any manner or for
any reason.
6. Payments. Assignor hereby covenants and agrees to
pay over to Assignee, if and when received following the date hereof, any
amounts (including any sums payable as interest in respect thereof) paid to or
for the benefit of Assignor that, under Section 2 hereof, belong to Assignee,
and Assignee hereby covenants and agrees to pay over to Assignor, if and when
received following the date hereof, any amounts (including any sums payable as
interest in respect thereof) paid to or for the benefit of Assignee that, under
Section 2 hereof, belong to Assignor.
7. Investment Purpose. Assignee hereby represents that
it is acquiring the Trust Estate interests and other interests hereby assigned
to it without a view to the distribution or resale of either thereof.
8. Representations and Warranties. Assignee represents
and warrants that:
(a) it has all requisite power and authority and legal
right to enter into and carry out the transactions contemplated hereby
and to carry out and perform the transactions of Owner Participant as
contemplated by the Relevant 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 mutatis mutandis and as set forth in any other
Agreement to which Owner Participant is a party are true and correct
as to Assignee;
(d) it is a permitted Transferee under Section 10 of the
Refunding Agreement;
(e) Assignee or its guarantor has a [combined capital,
surplus and undivided profits] [tangible net worth] of not less than
$60,000,000.
9. Governing Law. This Assignment and Assumption
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
- 3 -
<PAGE> 81
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Assumption Agreement as of the day and year first above written.
[ASSIGNOR]
By:
-----------------------------------
Title:
[ASSIGNEE]
By:
-----------------------------------
Title:
- 4 -
<PAGE> 82
EXHIBIT C to
REFUNDING AGREEMENT
LIST OF COUNTRIES
Australia
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Singapore
South Korea
Sweden
Switzerland
United Kingdom
<PAGE> 83
EXHIBIT D to
REFUNDING AGREEMENT
FORM OF INSURANCE BROKER'S REPORT
[to come]
<PAGE> 84
ANNEX A to
REFUNDING AGREEMENT
FAA DOCUMENTS
Documents Filed on the Restatement Date
(a) Trust Agreement Supplement [GPA 1989 BN-11] No. 2 dated June
__, 1997 (the "Trust Agreement Supplement") between the Owner
Trustee and the Owner Participant, amending the Trust
Agreement, which Trust Agreement Supplement was filed with the
FAA at _____ p.m., C.D.T. on June __, 1997;
(b) Amended and Restated Trust Indenture and Security Agreement
[GPA 1989 BN-11] dated as of June __, 1997 (the "Amended and
Restated Indenture") between the Owner Trustee and the
Indenture Trustee, amending and restating the Original
Indenture with attached thereto Trust Agreement and Indenture
Supplement No. 2 [GPA 1989 BN-11] dated June __, 1997 (the
"Indenture Supplement"), with respect to the Aircraft, which
Amended and Restated Indenture with the Indenture Supplement
attached was filed with the FAA at _____ p.m., C.D.T. on June
__, 1997;
(c) Assignment and Amendment No. 1 and Sublease Termination
Agreement dated as of June __, 1997 (the "Lease Amendment")
among the Original Head Lessee, as assignor, the Owner
Trustee, as lessor, the Lessee, as successor lessee, and the
Indenture Trustee, which (i) assigns certain right, title and
interest of the Original Head Lessee in and to the Original
Head Lease to the Lessee, (ii) terminates the Sublease and
(iii) releases the Sublease Collateral Assignment, which Lease
Amendment was filed with the FAA at _____ p.m., C.D.T. on June
__, 1997; and
(d) Amended and Restated Aircraft Lease Agreement [GPA 1989 BN-11]
dated as of December 18, 1989, amended and restated as of June
__, 1997 (the "Amended and Restated Lease") between the Owner
Trustee, as lessor, and the Lessee, as successor lessee,
amending and restating the Original Head Lease with Lease
Supplement [GPA 1989 BN-11] No. 3 dated June __, 1997 (the
"Lease Supplement") between the Owner Trustee, as lessor, and
the Lessee, as successor lessee, with respect to the Aircraft,
attached thereto, which Amended and Restated Lease with the
Lease Supplement attached was filed with the FAA at _____
p.m., C.D.T. on June __, 1997.
<PAGE> 85
Description of Indenture
Trust Indenture and Security Agreement [GPA 1989 BN-11] dated
as of December 19, 1989 between Wilmington Trust Company, as trustee under
Trust Agreement [GPA 1989 BN-11] dated as of December 19, 1989, and
Manufacturers Hanover Trust Company, as indenture trustee, which was recorded
by the Federal Aviation Administration on January 3, 1990 and assigned
Conveyance No. V78689, as supplemented by the following described instrument:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Indenture
Supplement No. 1 12/29/89 01/03/90 V78689
</TABLE>
- 2 -
<PAGE> 86
Description of Lease
Aircraft Lease Agreement [GPA 1989 BN-11] dated as of December
19, 1989 between Wilmington Trust Company, as trustee under Trust Agreement [GPA
1989 BN-11] dated as of December 19, 1989, as lessor, and GPA Leasing USA Sub I,
Inc., as lessee, which was recorded by the Federal Aviation Administration on
January 3, 1990 and assigned Conveyance No. V78690, 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-11]
No. 1 12/29/89 01/03/90 V78690
Lease Supplement
[GPA 1989 BN-11]
No. 2 01/05/95 03/09/95 DD007547
</TABLE>
- 3 -
<PAGE> 87
Description of Sublease
Aircraft Sublease Agreement [GPA 1989 BN-11] dated as of
September 21, 1990 between GPA Leasing USA Sub I, Inc., as sublessor, and
America West Airlines, Inc., as sublessee, which was recorded by the Federal
Aviation Administration on October 2, 1990 and assigned Conveyance No. F53828,
as supplemented and amended by the following described instruments:
<TABLE>
<CAPTION>
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
- ---------- ---------- -------------- --------------
<S> <C> <C> <C>
Sublease Supplement
No. 1 09/28/90 10/02/90 F53828
Amendment No. 1 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-11] 06/25/91 07/18/91 H77072
Amendment No. 2 to
Aircraft Sublease
Agreement [GPA 1989 as of
BN-11] 08/26/91 10/02/91 DD001724
</TABLE>
- 4 -
<PAGE> 1
EXHIBIT 4.16
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-8] 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, FORMERLY KNOWN AS CHEMICAL BANK, SUCCESSOR BY MERGER TO
MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER AN AMENDED AND
RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-8] DATED AS OF
JUNE ___, 1997. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY,
THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL
PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED
AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF
ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED
AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE
MANHATTAN BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- --------------------------------------------------------------------------------
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-8]
Dated as of December 19, 1989
Amended and Restated as of June __, 1997
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-8] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No.66
U.S. Registration No. N627AW
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Agreement to Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3. Delivery and Acceptance; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Time of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) [Intentionally Left Blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Acceptance of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Minimum Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Date, Place and Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6. Possession and Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Reciprocal Recognition of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(f) Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(g) Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(h) Certain Limitations on Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(i) Section 1110 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(j) Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(k) Security Opinion; Annual Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(l) Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 9. Replacement of Parts; Alterations, Modifications and Additions . . . . . . . . . . . . . . . . . . . . . 50
(a) Replacement of Parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(b) Alterations, Modifications and Additions . . . . . . . . . . . . . . . . . . . . . . . . . 51
(c) Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10. General Tax Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(b) Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(c) Covered Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(d) Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(e) After-Tax Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(f) Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(g) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(h) Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(i) Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(j) Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(k) Affiliated Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(l) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11. Loss, Damage and Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(a) Event of Loss with Respect to the Airframe . . . . . . . . . . . . . . . . . . . . . . . . 66
(b) Event of Loss with Respect to an Engine . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(c) Conveyance of Replacement Airframe . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(d) Application of Proceeds and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(e) Requisition for Use by Government with Respect to the Aircraft . . . . . . . . . . . . . . 74
(f) Application in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(a) Public Liability and Property Damage Insurance. . . . . . . . . . . . . . . . . . . . . . 75
(b) Insurance Against Loss or Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(c) Application of Insurance Proceeds for an Event of Loss . . . . . . . . . . . . . . . . . . 80
(d) Application of Insurance Proceeds for Other than an Event of Loss . . . . . . . . . . . . . 81
(e) Application in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(f) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(g) Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(h) Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
(i) Amounts Held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(j) After the Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
(k) Governmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 13. General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 14. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 15. Protection of Title and Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 16. Return of Aircraft and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(a) Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(b) Status Upon Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
(c) Engines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
(d) Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
(e) Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
(f) Final Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
(g) Aircraft Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
(h) Corrections and Subsequent Corrections . . . . . . . . . . . . . . . . . . . . . . . . . . 98
(i) Functional Flight Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
(j) Export Certificate of Airworthiness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
(k) Service Bulletin and Modification Kits . . . . . . . . . . . . . . . . . . . . . . . . . . 99
(l) Storage Upon Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
(m) Resale/Release Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 17. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 18. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 19. Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 20. Renewal Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
(a) Severability, Amendment, and Construction . . . . . . . . . . . . . . . . . . . . . . . . . 110
(b) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
(d) Lessor's Right to Perform for Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
(f) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
(g) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(h) Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(i) Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(j) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
(k) Federal Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
(l) U.S. Registration Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum Non Conveniens;
Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
(n) Limitation on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
(o) Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
(p) Article 2-A of the UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
</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 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
iv
<PAGE> 6
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19,
1989 and amended and restated as of June __, 1997 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-8] 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 S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective
meanings for all purposes of this Lease (including the Recitals) and shall be
equally applicable to both the singular and the plural forms of the terms
defined herein:
As used herein, the terms "Assigned Sublease", "Equipment
Notes", "Excepted Payments", "Foreign Lease Agreement", "Foreign Lender",
"Foreign Lessor", "Indenture Supplement", "Note Holder", "Pass Through Trust",
"Pass Through Trust Agreement", "Pass Through Trustee", "Past Due Rate",
"Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the terms "OP
Guarantee", "Lease Amendment No. 1" and "SLV Letter
<PAGE> 7
Agreement" shall have the meanings specified in the Refunding Agreement.
"Affiliate" shall mean, with respect to any specified Person,
any other Person which, directly or indirectly, owns or controls, is controlled
by or is under common control with such specified Person. Control will be
deemed to exist based on (i) ownership of 25% or more of the voting securities
of a Person or (ii) the power to direct or elect or cause the direction or
election of the management and policies of a Person whether by contract or
otherwise.
"Airbus Industrie" shall mean Airbus Industrie G.I.E., a
groupement d'interet economique formed under the laws of the French Republic,
and its successors and assigns.
"Aircraft" shall mean the Airframe leased hereunder and
described in Lease Supplement No. 1 (or any airframe from time to time
substituted for such Airframe pursuant to Section 11(a)(i) hereof) together
with the (i) two IAE Model V2500 Engines described in Lease Supplement No. 1
(or any Engine substituted therefor hereunder) with respect to such Airframe,
whether or not any such initial or substituted Engines may from time to time no
longer be installed on the Airframe or may be installed on any other airframe,
(ii) Parts or components thereof, (iii) spare parts or ancillary equipment or
devices furnished therewith under this Lease (including any separate equipment
described on one or more Lease Supplements hereto), (iv) the Aircraft Records
and Documents and all other logs, manuals and records with respect to such
Aircraft, and (v) all substitutions, replacements and renewals of any and all
thereof.
"Aircraft Records and Documents" shall mean the items
identified in Exhibit B hereto, all of which shall be maintained in the English
language.
"Airframe" shall mean (a) the Airbus Industrie model A320-231
aircraft (except Engines or engines from time to time installed thereon)
described in Lease Supplement No. 1 and leased by Lessor to Lessee hereunder,
and any such model aircraft (except Engines or engines from time to time
installed thereon) which may from time to time be substituted for such aircraft
(except Engines or engines from time to time installed thereon) pursuant to
Section 11(a)(i); and (b) any and all Parts so long as the same shall be
incorporated or installed on or attached to the Airframe, or so long as title
thereto shall remain vested in Lessor in
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<PAGE> 8
accordance with the terms of Section 9 hereof after removal from the Airframe
or, so long as the Foreign Lease Agreement is in effect, in Foreign Lessor in
accordance with Section 13 of the Foreign Lease Agreement; provided, however,
that at such time as an aircraft (except Engines or engines from time to time
installed thereon) shall be deemed part of the property leased hereunder in
substitution for the Airframe pursuant to the applicable provisions hereof and
the replacement Airframe shall have been subjected to the Lien of the Indenture
(if the Lien of the Indenture has not been discharged) and shall be subject to
the Foreign Lease Agreement, the replaced Airframe shall cease to be the
Airframe hereunder.
"Appraisal Procedure" shall mean the following procedure for
determining the "fair market sales value" or "fair market rental value" of the
Aircraft, Airframe, an Engine or a Part. Except as provided in Section 18,
"fair market sales value" or "fair market rental value" shall mean the value
that would be obtained in an arm's-length transaction between an informed and
willing seller or lessor, as the case may be, and an informed and willing buyer
or lessee, as the case may be, both under no compulsion to sell and purchase or
to lease (and other than a lessee in possession or a used equipment scrap
dealer), as the case may be, as such value is determined by an appraisal which
assumes: (i) that such Aircraft, such Airframe, such Engine or such Part is
unencumbered by this Lease (or any sublease) or any of the other Operative
Documents or any of the Financing Documents and the terms thereof; (ii) that
such Aircraft, Airframe, Engine or Part has been maintained in all respects in
accordance with the terms of this Lease (whether or not in fact in such
condition), (iii) that such Aircraft, Airframe, Engine or Part meets the return
conditions specified in Section 16 and Exhibit E (whether or not in fact
meeting such conditions) and (iv) that Lessee has removed the Removable Parts
entitled to be removed under Section 9(b) (it being agreed that no such removal
is permitted in connection with an appraisal pursuant to Section 18) and
replaced any part which was removed from the Aircraft as a result of such
Removable Part being installed; provided, however, that costs of removal from
the location of current use and costs of sale shall not be a consideration in
determining such value except in connection with any determination of "fair
market sales value" or "fair market rental value" pursuant to Section 18; and
provided, further, that any determination of "fair market sales value" or "fair
market rental value" pursuant to Section 18 shall be on an "as is, where is"
basis in its actual condition and
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<PAGE> 9
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 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.
"At Offshore" shall have the meaning specified in the
Indenture.
-4-
<PAGE> 10
"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.
"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
-5-
<PAGE> 11
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.
"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 29, 1989, being the date
the Aircraft was delivered to and accepted by the Original Head Lessee as
Lessee hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United
States of America.
"Engine" shall mean (i) each of the two IAE Model V2500
engines listed by manufacturer's serial number in Lease Supplement No. 1 and
initially installed on the Airframe covered by such Lease Supplement, whether
or not from time to time thereafter no longer installed on the Airframe or
installed on any other aircraft or airframe, and (ii) any replacement engine
which may from time to time be substituted, pursuant to Section 6(a), 11(a),
11(b) or 16(c), for any Engine leased hereunder; together in each case with any
and all Parts incorporated or installed in or attached thereto or any and all
Parts removed therefrom so long as title thereto after removal from such Engine
shall remain vested in Lessor in accordance with the terms of Section 9 hereof
(or so long as the Foreign Lease Agreement is in effect, in Foreign Lessor in
accordance with Section 13 of the Foreign Lease Agreement). Except as
otherwise set forth herein, at such time as a replacement engine shall be
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<PAGE> 12
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) and shall have been subjected to the Foreign Lease Agreement
if in effect, such replaced Engine shall cease to be an Engine hereunder. The
term "Engines" means, as of any date of determination, both Engines then leased
hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, as from time to time in effect.
"Event of Default" shall have the meaning specified in any one
or more clauses in Section 17.
"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 a 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
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<PAGE> 13
to or does continue beyond the Term; (g) as a result of any law, rule,
regulation, order or other action by the FAA, the Department of Transportation
or any other Governmental Entity having jurisdiction, the use of such Aircraft,
Airframe or Engine in the normal course of Lessee's (or, if a Permitted
Sublease is in effect, the Permitted Sublessee's) business of air
transportation of passengers shall have been prohibited for a period of six (6)
consecutive months, unless Lessee (or the Permitted Sublessee), prior to the
expiration of such six-month period, shall have undertaken and shall be
diligently carrying forward all steps which are necessary or desirable to
permit such normal use of such item of equipment by Lessee (or the Permitted
Sublessee), or, in any event, if such normal use shall have been so prohibited
by any such Governmental Entity for a period of twelve (12) consecutive months
or is continuing on the last day of the Term; or (h) as otherwise provided
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 AT Offshore, and (ii) the Bill of Sale for the
Aircraft on AC Form 8050-2, dated the Delivery Date, from AT Offshore 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.
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<PAGE> 14
"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 ended December 31,
1996, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each
Lease Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture, each Indenture Supplement, the 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 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 Documents" shall mean the Foreign Financing
Documents, as defined in the Indenture.
"Foreign Lessee" shall mean GPA HK-320-B, Limited.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
-9-
<PAGE> 15
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
"Head Lessor's Lien" shall mean a "Lessor's Lien" under and as
defined in the Original Head Lease.
"IAE" shall mean IAE International Aero Engines AG, a company
organized and existing under the laws of Switzerland.
"Indemnitee" shall mean Foreign Lessor, Foreign Lessee,
Foreign Lender, Lessor (in its individual capacity and as trustee under the
Trust Agreement), the Trust Estate, Owner Participant, the general partners
(and not the limited partners, if any) of 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, employees, subsidiaries,
Affiliates and shareholders.
"Indenture" shall mean the First Amended and Restated Trust
Indenture and Security Agreement [GPA 1989 BN-8] dated as of June __, 1997, 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> 16
"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 an Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in
Section 6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease
Supplement No. 2 and Lease Supplement No. 3 and each subsequent Lease
Supplement entered into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989
BN-8] No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as
Lessee.
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<PAGE> 17
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989
BN-8] No. 2 dated December 29, 1994 between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989
BN-8] No. 3, substantially in the form of Exhibit D-1 hereto, entered into
between Lessor and Lessee on the Restatement Date for the purpose of confirming
the leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Aircraft or the
administration of the Trust Estate or the Trust Indenture Estate pursuant to
the Indenture, whether under Section 9-207(2)(e) of the Uniform Commercial Code
or otherwise, (ii) acts or omissions of Indenture Trustee in its individual
capacity (and not as Indenture Trustee) not contemplated hereunder or under the
other Operative Documents, or acts or omissions of Indenture Trustee in its
individual capacity (and not as Indenture Trustee) which are in violation of
any of the Operative Documents, or (iii) Taxes imposed on or Claims against
Indenture Trustee in its individual capacity (and not as Indenture Trustee)
which are excluded from indemnification by Lessee, or (iv) Claims against
Indenture 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
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<PAGE> 18
Lessor, Owner Participant, any partner of the 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, the Foreign
Lease Documents or the Purchase Documents; (ii) any affirmative act of Lessor,
Owner Participant, any partner of the 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, Owner
Participant, any partner of the Owner Participant or any of their Affiliates or
the consolidated group of taxpayers of which any of them is a member which are
not to be indemnified against by Lessee under the Operative Documents, the
Purchase Documents or the Financing Documents or by Original Head Lessee under
the Original Head Lease Tax Indemnification Agreement; (iv) claims against the
Trust Estate, Trust Company, Owner Participant, any partner of the Owner
Participant or Lessor or any of their Affiliates arising out of the transfer of
all or any part of their respective interest in the Aircraft, the Airframe,
either Engine, the Trust Estate, the Operative Documents or the Financing
Documents other than any transfers or dispositions pursuant to Sections 2, 6,
9, 11, 16, 18, 19 or 20 (except Liens resulting from a transfer not permitted
by such Section) of this Lease or pursuant to Section 10 of the Refunding
Agreement or pursuant to 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 or 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
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<PAGE> 19
agreement, equipment trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the
Indenture on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West
Maintenance Program approved by the FAA for America West Airbus model A320-231
aircraft in effect on the date hereof or as modified with the approval of the
FAA without affecting, or any other FAA approved maintenance program which does
not affect, the return condition standards set forth in Section 16 and Exhibit
E or (ii) if the Aircraft is subject to a Permitted Sublease to a Foreign Air
Carrier, any other maintenance program for the Aircraft which is approved by
the aviation authority of the country of registry and complies with the
requirements applicable to maintenance of the Aircraft contained in the
definition of Foreign Air Carrier. The Maintenance Program shall encompass
scheduled maintenance, condition monitored maintenance, and on-condition
maintenance of the Airframe, Engines, and components of the Aircraft,
including, but not limited to, servicing, testing, preventive maintenance,
repairs, structural inspections, structure life improvements, system checks,
overhauls, approved modifications, service bulletins, engineering orders,
airworthiness directives, and corrosion control inspections and treatments.
All modifications and supplements to the Maintenance Program shall be provided
to Lessor upon its reasonable request and Lessor shall be given reasonable
access to the Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's
Subsidiary, IAE, Airbus Industrie or, as the case may be, any one or more
thereof as may be applicable in any given circumstance, together in each case
with any subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a
French societe a responsabilite limitee, which as of the date hereof is owned
by Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning
specified in Exhibit C.
"Mortgage Convention" shall mean the Convention for the
International Recognition of Rights in Aircraft, signed (ad referendum) at
Geneva, Switzerland, on June 19, 1948, and amended from time to time, but
excluding the terms
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<PAGE> 20
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, the SLV Letter Agreement, and any certificate delivered or entered
into pursuant to the foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement
[GPA 1989 BN-8], 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-8], dated as of
December 19, 1989, and amended and restated as of the Restatement Date, between
the Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc.,
a Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as
defined in the Original Head Lease) as in effect immediately prior to the
Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-7] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-9] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee and the Amended and Restated Aircraft Lease Agreement [GPA 1989
BN-11] amended and restated as of the Restatement Date between Wilmington Trust
Company as Owner Trustee, Lessor,
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<PAGE> 21
and America West Airlines, Inc. as Lessee, each as amended, supplemented or
otherwise modified from time to time.
"Other Letters of Credit" shall mean any and all letters of
credit pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean _______________, 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-8], dated as of December 19, 1989, among Original Head
Lessee, Parent, Owner Participant, Owner Trustee, Indenture Trustee and the
"Lender" named therein, as amended, supplemented or otherwise modified from
time to time and as in effect immediately prior to the Restatement Date.
"Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature (excluding complete Engines or engines), including Buyer
Furnished Equipment, which may now or from time to time be incorporated or
installed in or attached to or were provided by the Manufacturer with the
Airframe or any Engine or so long as title thereto shall remain vested in
Lessor in accordance with the terms of Section 9 hereof after removal from such
Airframe or Engine or, so long as the Foreign Lease Agreement is in effect,
Foreign Lessor in accordance with Section 13 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.
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<PAGE> 22
"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 (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).
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<PAGE> 23
"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.
"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> 24
(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 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) or (ii); provided that if
all of the above investments are unavailable, the entire amounts to be invested
may be used to purchase Federal funds from an entity described in clause (iii)
above; and provided further that no investment shall be eligible as a
"Specified Investment" unless the final maturity or date of return of such
investment is on or before the date which is ninety (90) days from the date of
purchase thereof.
"Stipulated Loss Value" shall mean as of the applicable date
during the Basic Term the amount set forth on Exhibit A hereto and, thereafter,
the amount described in Section 20 (it being understood and agreed that the
amounts set forth in Exhibit A take into account fully the amount and
application of each installment of Basic Rent or Renewal Rent on each
Stipulated Loss Value Date [(other than a Stipulated Loss Value Date that is a
Basic Rent Payment Date or Renewal Rent Payment Date) so that no additional
credit of such Basic Rent or Renewal Rent is to be made in respect thereof
except as expressly provided herein on a Basic Rent Payment Date or a Renewal
Rent Payment Date)]. In the event that it is necessary to determine a separate
Stipulated Loss Value for the Airframe or an Engine, such Stipulated Loss Value
shall be based on the ratio that the original cost to Lessor of the Airframe or
such Engine bears to Lessor's Cost (as set forth in the Original Head Lease)
for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date
listed, or with respect to any Renewal Term determined as set forth, on Exhibit
A hereto.
"Supplemental Rent" shall mean any and all amounts,
liabilities and obligations other than Basic Rent and Renewal Rent which Lessee
assumes or agrees to pay to Lessor or any other Indemnitee hereunder or under
any other Operative Document, including, without limitation, (i) any
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<PAGE> 25
payment of Stipulated Loss Value and any payment provided for in Section 11 or
18; (ii) any payment of indemnity required by Section 10 or 13 hereof; (iii)
any payment of an amount equal to average daily Basic Rent or Renewal Rent in
connection with an extension of the Term of this Lease as a result of (a) an
incipient Event of Loss and the operation of Section 11 hereof or (b) the need
to correct any failure of the Aircraft to satisfy the requirements of Section
16 and Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal
to any payment due to the Owner Trustee in respect of fees or expenses as
provided in Section 21(j) hereof; (vi) an amount equal to any payment due to
the Indenture Trustee in respect of fees or expenses as provided in the
Indenture and/or Section 21(j) hereof; (vii) the Pro Rata Share of any payment
due to any Pass Through Trustee in respect of fees or expenses pursuant to the
Pass Through Trust Agreement; (viii) the Pro Rata Share of any payment due to
the Subordination Agent in respect of fees, compensation, costs or expenses
pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount
specified in clause (b) of the fourth paragraph of Section 2.02 of the
Indenture; and (x) to the extent permitted by applicable Law, interest at the
Interest Rate calculated: (1) on any part of any installment of Basic Rent or
Renewal Rent, or average daily Basic Rent referred to in clause (iii) of this
definition of "Supplemental Rent", as the case may be, not paid on the due date
thereof for the period for which the same shall be overdue and (2) on any
Supplemental Rent not paid when due hereunder from and including the due date
until the same shall be paid. As used herein, "Pro Rata Share" means as of any
date of determination a fraction the numerator of which is the aggregate
Principal Amount then outstanding of the Equipment Notes issued under the
Indenture and the denominator of which is the aggregate principal balance then
outstanding of all "equipment notes" issued under the Indentures (as defined in
the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and
Restated Sublease Tax Indemnification Agreement [GPA 1989 BN-8], dated as of
September 21, 1990, and as amended and restated as of the Restatement Date
between Original Head Lessee and Lessee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Taxes" shall have the meaning specified in Section 10(a).
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<PAGE> 26
"Taxing Authority" shall have the meaning specified in Section
10(a).
"Term" shall mean, collectively, the Basic Term specified in
Lease Supplement No. 3 and, if Lessee extends the Term in accordance with
Section 20, the Renewal Term, in either case as extended or deemed extended as
a result of the occurrence of an event described in clause (iii) to the
definition of "Supplemental Rent" in this Lease, for which the Aircraft is
leased hereunder pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989
BN-8] dated as of December 19, 1989 as amended by Trust Supplement No. 1 and as
further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust
Agreement" shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust Supplement entered into thereunder
and any further supplement to the Trust Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement
[GPA 1989 BN-8] 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-8] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government
of the United States of America and any board, commission, department,
division, organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees
to furnish the Aircraft or the Airframe and Engine or engines installed thereon
at that time to a third party pursuant to which such Aircraft or the Airframe
and
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<PAGE> 27
Engine or engines (i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses required under the Federal
Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease
the Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from
Lessor, on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to
Lessee, and Lessee accepted delivery of the Aircraft, on December 29, 1989.
(b) [Intentionally Left Blank]
(c) Acceptance of Aircraft. The Aircraft leased
hereunder was delivered to Lessee "AS IS," "WHERE IS" and SUBJECT TO EACH AND
EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTIONS 5(a)
AND (b) HEREOF.
Lessee hereby agrees that it has accepted the Aircraft for all
purposes of this Lease and Lessee's acceptance of the Aircraft was conclusive
evidence that, as between Lessor and Lessee, the Aircraft was in all respects
satisfactory to Lessee and was in compliance with this Lease.
(d) Term of Lease. The Basic Term of this Lease shall
commence on the Delivery Date and shall continue until the Expiration Date;
provided, however, that the Term of this Lease may be earlier terminated
pursuant to the provisions hereof.
Section 4. Rent.
(a) Rent. Lessee covenants and agrees to pay the following
as Rent hereunder:
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(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, except for Supplemental Rent constituting
interest on overdue amounts, which shall be due and payable on demand. In the
event of any failure on the part of Lessee to pay any Supplemental Rent when
due, Lessor shall have all rights, powers and remedies provided for herein or
by law or equity or otherwise in the case of nonpayment of Basic Rent or
Renewal Rent. Lessee's obligation to pay Supplemental Rent which is due and
owing pursuant to the terms hereof shall survive the expiration or termination
of Lessee's obligation to pay Basic Rent or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any
provision in this Lease or in any other Operative Document to the contrary,
under all circumstances and in any event, (i) the Stipulated Loss Value,
together with the payment of Supplemental Rent and all other Rent then due
hereunder, as of any time and as of the date of any payment thereof shall (both
before and after giving effect to any reductions therefrom) be in an amount at
least sufficient to pay in full as of such time or date the aggregate unpaid
principal amount of the Equipment Notes then outstanding and all accrued and
unpaid interest (assuming interest has been timely paid) thereon, and (ii)
Basic Rent payable on any Basic Rent Payment Date shall at least equal the
aggregate amount of principal and interest due and payable on the Equipment
Notes on such Basic Rent Payment Date. It is agreed, however, that no
installment of Basic Rent or Stipulated Loss Value shall be increased or
adjusted by reason of (A) any attachment or diversion of Rent on account of any
Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the
Equipment Notes or the other Financing Documents made without the prior written
consent of Lessee or (C) the acceleration of any Equipment Note due to the
occurrence of any "Indenture Event of Default" (as defined in the Indenture)
which does not constitute an Event of Default hereunder. It is further agreed
that nothing in this Lease or any other Operative Document shall be deemed to
constitute a guaranty of the value, utility or useful life of the Aircraft or a
guaranty in respect of interest,
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<PAGE> 29
principal or any other amounts payable in respect of or under the Equipment
Notes.
(c) Date, Place and Method of Payment. If any date on
which a payment of Rent becomes due and payable is not a Business Day, the Rent
otherwise due on such date shall be due and payable on the next succeeding
Business Day. All Basic Rent, Renewal Rent and Supplemental Rent payable under
this Lease shall be paid by wire transfer in immediately available currency of
the United States of America, no later than 12:00 p.m. (noon), New York City
time, on the date payable hereunder, and, so long as the Lien of the Indenture
shall not have been discharged, to or as directed by Indenture Trustee in
accordance with the payment instructions set forth in Exhibit C hereto or at
such other address in the City of New York or Hartford, Connecticut as
Indenture Trustee may direct by thirty (30) days prior written notice to
Lessee, except for all Excepted Payments. All Excepted Payments, and, upon
discharge of the Lien of the Indenture, all payments of Rent thereafter made
hereunder, shall be paid in such immediately available funds no later than
12:00 p.m. (noon), New York City time, on the date payable hereunder, to Lessor
or to Owner Participant, as appropriate, in accordance with the payment
instructions set forth in Exhibit C or at such other address as Lessor may
direct by thirty (30) days prior written notice to Lessee.
(d) Prohibition Against Setoff, Counterclaim, Etc. This
Lease is a net lease. Lessee's obligations to pay all Rent and to perform all
other obligations hereunder are absolute and unconditional and shall not be
affected or reduced by any circumstances, including, without limitation, (i)
any setoff, counterclaim, recoupment, defense, or other right which Lessee may
have against Lessor, Original Head Lessee, Owner Participant, Indenture
Trustee, any Note Holder, any Manufacturer, any Person providing services with
respect to the Aircraft, or any other Person, for any reason whatsoever
(whether in connection with the transactions contemplated hereby or otherwise),
including, without limitation, any breach by Lessor of its representations,
warranties or covenants contained herein or in the other Operative Documents;
(ii) any defect in the title, airworthiness, eligibility for registration under
the Federal Aviation Act, condition, design, operation, or fitness for use of,
or any damage to or loss or destruction of, the Aircraft (subject to the
provisions of Section 11(a)(ii) hereof), any interruption or cessation in the
use of or possession thereof by or availability to Lessee for
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<PAGE> 30
any reason whatsoever, whether arising out of or related to an act or omission
of Lessee, Lessor, Original Head Lessee, Owner Participant, Indenture Trustee,
any Note Holder, any Manufacturer, any Person providing services with respect
to the Aircraft or any other Person; (iii) any Liens with respect to the
Aircraft; (iv) the invalidity or unenforceability or lack of due authorization
or other infirmity of this Lease or any sublease or any absence of right, power
or authority of Lessor, Original Head Lessee, Lessee or Indenture Trustee to
enter into this Lease or the Indenture, as the case may be; (v) any insolvency,
bankruptcy, reorganization, or similar proceedings by or against Lessor,
Original Head Lessee, Lessee, any sublessee, Indenture Trustee or any Note
Holder; (vi) any Taxes; or (vii) any other circumstance or happening of any
nature whatsoever, whether or not similar to any of the foregoing; it being the
expressed intention of Lessor and Lessee that all Rent payable hereunder shall
be payable in all events, unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement,
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, abate, cancel, quit, reduce,
defer, suspend or surrender this Lease or the Aircraft or any obligation
imposed upon Lessee hereunder or under the other Operative Documents
(including, without limitation, payment of Rent), except in accordance with the
terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee
will not seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law, except as specifically provided herein,
Lessee waives all rights (if any) to any diminution in its Rent obligations
hereunder and nonetheless agrees to pay to Indenture Trustee or Lessor as
provided in Section 4(c) hereof an amount equal to each Basic Rent or Renewal
Rent, as the case may be, payment and any Supplemental Rent payment at the time
such payments would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or 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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<PAGE> 31
Lessor and Lessee will deem this Lease to remain in full force and effect.
The foregoing shall not, however, be construed as a waiver of
Lessee's other rights to seek damages, specific performance, other remedies at
law or equity or any combination thereof, as against the Original Head Lessee,
Lessor, Indenture Trustee or any other Person having an interest herein through
the Original Head Lessee, Lessor, Indenture Trustee or any other Person as
shall be liable therefor, on account of any failure of the Original Head
Lessee, Lessor, Indenture Trustee or any other such Person to perform its
express obligations under this Lease and the other Operative Documents, or to
enforce any judgment obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE
AIRCRAFT WAS DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND
"WHERE IS". LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS.
LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED
THE AIRCRAFT UNDER THIS LEASE OR BY HAVING ACQUIRED THE AIRCRAFT OR DONE OR
FAILED TO DO ANY ACT OR ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN
RELATION TO THIS LEASE, AND NEITHER LESSOR NOR OWNER PARTICIPANT HAS MADE, AND
LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING
OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR
OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
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<PAGE> 32
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE
IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT
OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF
BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN
THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND
LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR
GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that
(x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has,
the right to lease the Aircraft hereunder and (y) on the Delivery Date the
Aircraft was free of Head Lessor's Liens and on the Restatement Date the
Aircraft is free of Lessor's Liens and Head Lessor's Liens and (B) Lessor
covenants that it shall not create, incur, assume or suffer to exist any
Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor
hereby represents and warrants, as of the Restatement Date that its
representations and warranties set forth in Section 9(b) of the Refunding
Agreement were true when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor
covenants and agrees that Lessor will not, without the prior written consent of
Lessee, amend, modify, supplement or waive any provision of any Financing
Document in such a way as to materially increase Lessee's obligations hereunder
or materially reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under
Sections 5(a) and 5(b) and this Section 5(c) shall survive the execution and
delivery of this Lease and the delivery of the Aircraft and the Restatement
Date.
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(d) Suppliers' Warranties. So long as a Default or an
Event of Default has not occurred and is continuing and provided that the
Aircraft continues to be maintained, modified and repaired as required
hereunder, Lessor hereby assigns or, if by their terms not assignable, agrees
otherwise to make available to Lessee the right to exercise in Lessee's name
such rights as Lessor may have or may subsequently obtain (but without
representation or warranty by or recourse to Lessor) with respect to any
product warranty, service life policy, trademark, patent or copyright
infringement indemnity, or airframe or propulsion system performance guaranty,
of Airbus Industrie, the Manufacturer's Subsidiary, IAE or any subcontractor or
vendor with respect thereto under the Purchase Agreement (except those which
were given directly to Parent, the Original Head Lessee or any of their
Affiliates and are not directly related to the operator's use of the Aircraft),
to the extent that the same may be assigned or otherwise made available to
Lessee, and Lessor agrees to exert its reasonable efforts, at Lessee's expense
and upon its request, to enforce such rights as Lessor may have with respect
thereto for the benefit of Lessee; provided, however, that upon and during the
continuance of a Default or an Event of Default, such assignment or other
rights which are otherwise made available to Lessee shall immediately and
automatically without further action be deemed cancelled and, to the extent of
any remaining interest held by Lessee, deemed reassigned to Lessor and all such
rights shall revert to Lessor automatically including all claims thereunder
whether or not perfected and all amounts payable shall be paid to and held by
Lessor. In no event, however, shall Lessee have any right to amend, supplement
or otherwise modify the Purchase Agreement (by change order or otherwise). In
connection with the foregoing, Lessee agrees to be bound by and comply with all
applicable terms, conditions and limitations of the provisions of the Purchase
Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL
NOT ASSIGN THIS LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN
(EXCEPT AS PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE
IN ANY 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
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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 or Foreign Lessor's (so long as the Foreign Lease Agreement
is in effect) title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an
Event of Loss with respect to such Engine and not an Event of Default
and Lessee shall comply with Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or
any Engine to the manufacturer thereof, or in accordance with the
Maintenance Program to an FAA certified repair station, for testing,
service, storage, repair, maintenance, inspection or overhaul work on
such Aircraft, Airframe or Engine or any part thereof or for
alterations or modifications in or additions to such Aircraft,
Airframe or Engine to the extent required or permitted by the terms of
Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe
to the United States of America or any instrumentality or agency
thereof pursuant to a sublease;
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(4) (i) subject the Airframe to the Civil Reserve Air Fleet
Program and transfer possession of the Airframe or any Engine to the
United States Government pursuant to the Civil Reserve Air Fleet
Program, so long as Lessee shall promptly notify Lessor upon
transferring possession of the Airframe or any Engine to the United
States Government pursuant to the Civil Reserve Air Fleet Program and
provide Lessor with the name and address of the Contracting Office
Representative for the Military Airlift Command of the United States
Air Force to whom notices must be given; or
(ii) subject the Airframe to (A) a service contract with
the United States Government, a copy of which shall be provided to
Lessor, providing for possession to be held by the United States
Government for a period not extending beyond the end of the Term, or
(B) a requisition for use by the United States Government not
constituting an Event of Loss;
(5) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except (A)
Permitted Liens and Liens which apply only to engines (other than the
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety) and (B) the rights
of participants under normal interchange agreements which are
customary in the airline industry and do not contemplate, permit,
result in or require the transfer of title to the airframe or engines
installed thereon;
(6) install an Engine on an airframe leased to Lessee or
owned by Lessee subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all
Liens except the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe and except
Liens of the type permitted by clauses (A) and (B) of Section
6(a)(i)(5) and the Lien of any mortgage which provides that each
Engine leased to Lessee hereby shall not become subject to the Lien
thereof or to any rights of any party thereunder other than Lessee
(with respect to Lessee's rights expressly granted hereunder),
notwithstanding the installation of such Engine on any airframe
subject to the Lien of such mortgage, unless and until Lessee shall
become the
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owner of such Engine and Lessor shall have no further interest
therein, all pursuant to the express terms of this Lease; and (B)
there shall be in effect a written agreement of the lessor or secured
party of such airframe (which may be contained in the lease or
conditional sale or other security agreement covering such airframe)
substantially similar in effect to the agreement of Lessor in Section
6(b) below whereby such lessor or secured party effectively and
expressly agrees that neither it nor its successors or assigns will
acquire or claim any right, title or interest in any Engine by reason
of such Engine being installed on such airframe at any time while such
Engine is subject to this Lease or is owned by Lessor, and a copy of
such agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee,
leased to Lessee or purchased by Lessee subject to a conditional sale
or other security agreement under circumstances where neither Section
6(a)(i)(5) or Section 6(a)(i)(6) is applicable; provided that such
installation shall be deemed an Event of Loss with respect to such
Engine and Lessee shall comply with Section 11(b) hereof in respect
thereof, Lessor not intending hereby to waive any right or interest it
may have to or in such Engine under applicable Law until compliance by
Lessee with such Section 11(b);
(8) enter into a Wet Lease for the Aircraft or the
Airframe and engines installed thereon in the ordinary course of
Lessee's business for a period not extending beyond the Term; provided
that if Lessee shall enter into any Wet Lease for a period of more
than six months (including renewal options) Lessee shall provide to
Lessor written notice of such Wet Lease (such notice to be given at
least ten (10) Business Days prior to entering into such Wet Lease);
or
(9) sublease the Aircraft or the Airframe to any
Permitted Sublessee on the terms and conditions set forth in Section
6(a)(iii) below.
(ii) Certain Limitations on Transfers. With
respect to any transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession
by reason of a transfer permitted by Section
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6(a) hereof (other than the transfer of an Engine which is deemed to
have been an Event of Loss) and any Wet Lease shall be expressly
subject and subordinate to all the terms of this Lease and the Lien of
the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other
Operative Documents shall continue in full force and effect and Lessee
shall remain primarily liable hereunder for the performance of all of
the terms of this Lease to the same extent as if such transfer had not
occurred and no provision of this Lease shall be deemed a waiver of
the Lessor's rights hereunder or under the other Operative Documents
nor discharge or diminish any of Lessee's obligations hereunder or
under the other Operative Documents;
(3) During the Restricted Use Period, no Wet Lease,
Permitted Sublease or other relinquishment of possession of the
Aircraft, the Airframe or any Engine pursuant to the terms of this
Section 6(a) shall be permitted if such Wet Lease, Permitted Sublease
or other relinquishment of possession would cause the Aircraft, the
Airframe or such Engine to be "tax-exempt use property" within the
meaning of Section 168(h) of the Code or cease to be "Section 38
property" within the meaning of Section 48(a) of the Code (as
determined after the application of Section 47(a)(7) of the Code);
(4) The term of any transfer, Wet Lease, Permitted
Sublease or other relinquishment of possession shall not extend beyond
the Basic Term or the Renewal Term (if Lessee shall have exercised its
option to renew this Lease in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession of the Aircraft, the Airframe or any
Engine shall in any way discharge or diminish any of Lessee's
obligations to Lessor or any other Person hereunder for which
obligations Lessee shall remain primarily liable;
(6) The sublessee under any Permitted Sublease, in its
consent thereto, shall confirm that from and after the occurrence and
continuance of an Event of Default and, unless an Event of Default
specified in Section 17(e), (f) or (g) of this Lease has occurred and
is continuing, this Lease being deemed or declared
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<PAGE> 38
in default, Lessor (and, so long as the Lien of the Indenture shall
not have been discharged, Indenture Trustee) shall be entitled to
enforce directly and in its own name all representations, warranties,
indemnities, covenants and agreements under the applicable Permitted
Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I)
the Aircraft or Airframe may not be operated or used other than as
provided in this Lease and shall be maintained and operated as
required hereunder, (II) Lessor may avoid or terminate such sublease
following an Event of Default hereunder and (III) to the extent not
accomplished by an assignment of the Permitted Sublease, upon the
occurrence of an Event of Default hereunder, Lessee's rights under
such Permitted Sublease shall automatically be deemed assigned to
Lessor; and (B) be a "net lease" in accordance with industry practice
and shall be comparable to, or more restrictive than, this Lease and
under such Permitted Sublease (except a sublease to the United States
Government or a Foreign Air Carrier after the Restricted Use Period),
Lessee as lessor under such Permitted Sublease, must be entitled to
the same benefits under 11 U.S.C. Section 1110 as Lessor is entitled
hereunder and such Permitted Sublease shall contain provisions
regarding such Section 1110 which are substantially the same as the
related provisions of this Lease. In addition, from and after the
occurrence and continuance of an Event of Default, all rent and other
amounts payable by the Permitted Sublessee under such Permitted
Sublease shall be paid directly to Indenture Trustee and, upon
discharge of the Lien of the Indenture, to Lessor.
(iii) Permitted Subleases. With respect to any
sublease pursuant to Sections 6(a)(i)(3) or (4) (to the extent permitted by
Law) or Section 6(a)(i)(9) above:
(1) Lessee may sublease the Aircraft or the Airframe to a
Permitted Sublessee (each of which shall constitute a "Permitted
Sublease") if (A) in any such case, the Permitted Sublessee under such
sublease is not subject to a proceeding or final order under
applicable bankruptcy, insolvency or reorganization laws on the date
such sublease is entered into, (B) in the event that the Permitted
Sublessee under such sublease is a Foreign Air Carrier (other than a
Foreign Air Carrier principally based in Taiwan), the United
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<PAGE> 39
States maintains diplomatic relations with the country in which such
proposed Permitted Sublessee is principally based at the time such
sublease is entered into (or, in the case of a sublease to a proposed
Permitted Sublessee principally based in Taiwan, maintains diplomatic
relations at least as good as those in effect on the Restatement Date)
and (C) in the event that the Permitted Sublessee under such sublease
is a Foreign Air Carrier, Lessor and the Indenture Trustee shall have
received an opinion of counsel to Lessee, in form and substance
reasonably satisfactory to Owner Participant and the Indenture
Trustee, to the effect that (I) the terms of the proposed sublease
will be legal, valid, binding and (subject to customary exceptions in
foreign opinions generally) enforceable against the proposed Permitted
Sublessee in the country in which the Permitted Sublessee is
principally based, (II) there exist no possessory rights in favor of
the Permitted Sublessee under such sublease under the laws of such
Permitted Sublessee's country of domicile that would, upon bankruptcy
or insolvency of or other default by Lessee, prevent the return or
repossession of the Aircraft in accordance with the terms of this
Lease, (III) (unless Lessee shall have agreed or is required to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of the country of such Permitted
Sublessee's country of domicile) the laws of such Permitted
Sublessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely convertible
into dollars for the loss of use of the Aircraft in the event of the
requisition by such government of such use, (IV) the Permitted
Sublessee is either not entitled to sovereign immunity, or has
effectively waived such sovereign immunity, with respect to its rights
and obligations under the proposed sublease; (V) the laws of such
Permitted Sublessee's country of domicile would give recognition to
Lessor's title to the Aircraft, to the registry of the Aircraft in the
name of the Lessor (or Lessee, as "lessee", or the proposed Permitted
Sublessee, as "sublessee", as appropriate) and to the Lien of the
Indenture; (VI) it is not necessary under the laws of such Permitted
Sublessee's country of domicile, solely as a consequence of such
subleasing and without giving effect to any other activity of Owner
Participant, Owner Trustee or Indenture Trustee or any Affiliate
thereof, as the case may be, for the Owner Trustee, the Owner
Participant or the Indenture Trustee to qualify
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to do business in such jurisdiction; and (VII) if the Owner
Participant so requests, (x) under the laws of such Permitted
Sublessee's country of domicile there is no tort liability of the
owner of an aircraft not in possession thereof (it being agreed that
in the event this opinion cannot be given in a form reasonably
satisfactory to Owner Participant, such opinion shall be waived if
insurance reasonably satisfactory to Owner Participant is provided to
cover such risk), and (y) such other matters as the Owner Participant
reasonably requests, provided, however, that no sublease shall extend
beyond the expiration of the Basic Term or any Renewal Term then in
effect.
Any Permitted Sublease shall expressly provide that the rights
of any Permitted Sublessee shall be expressly subject and subordinate to all
the terms of this Lease and to the Lien of the Indenture (if it has not been
discharged), including, without limitation, the covenants contained in Sections
6(c), 6(d) and 6(e) hereof and Lessor's rights to repossession pursuant to
Section 18 hereof and to avoid or terminate such Permitted Sublease upon such
repossession, and Lessee shall remain primarily liable hereunder for the
performance of all of the terms of this Lease to the same extent as if such
Permitted Sublease had not occurred. No Permitted Sublease shall in any way
discharge or diminish any of Lessee's obligations to Lessor hereunder or under
the other Operative Documents or constitute a waiver of Lessor's rights or
remedies hereunder or under the other Operative Documents, and such rights
shall continue as if such Permitted Sublease had not occurred. Any Permitted
Sublease shall expressly prohibit any further sub-sublease or assignment or any
other similar transfer of the Aircraft, Airframe or any Engine or rights
thereto by the Permitted Sublessee. Lessee shall provide to the Owner
Participant and the Indenture Trustee (i) written notice of any Permitted
Sublease hereunder (such notice to be given not later than ten Business Days
prior to entering into any Permitted Sublease with any proposed Permitted
Sublessee), and (ii) a copy of each Permitted Sublease together with an
assignment, as security for Lessee's obligations hereunder, of such Permitted
Sublease, and if Lessor or the Indenture Trustee so requests, a consent thereto
from such Permitted Sublessee, in form and substance reasonably satisfactory to
Lessor and the Indenture Trustee, within ten (10) Business Days following the
effective date of such Permitted Sublease.
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(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 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,
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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 or (iii) which prohibits
the operation or location therein of Aircraft owned by a United States citizen.
Lessee also agrees not to operate or locate the Aircraft or suffer or permit
the Aircraft to be operated or located in any area excluded from coverage by
any insurance policy issued pursuant to the requirements of this Lease or in
any war zone unless insured or indemnified by the United States of America
therefor, except in the case of operation pursuant to a sublease or contract
with, or as a result of a requisition (not constituting an Event of Loss) by,
the United States of America, and then only if Lessee has obtained insurance or
an indemnity (in lieu of such insurance) from the United States of America
covering such risks, in the amounts and otherwise as required by this Lease.
Lessee shall in no event permit the Aircraft, the Airframe or any Engine to be
used, located, operated or maintained in Hong Kong or the People's Republic of
China.
(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
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bulletins and other requirements of any manufacturer, including, without
limitation, such requirements as may be applicable to keep in full force and
effect any and all material warranties, product and performance guaranties,
service life policies, indemnities or the like, (C) except during any period
that a Permitted Sublease is in effect, in the same manner and with the same
care, including regard for the status and technical condition of the Aircraft,
as shall be the case with respect to similar aircraft and engines owned by
Lessee without discrimination and as if Lessee owned the Aircraft and was going
to use the Aircraft in continued regular customer service after the expiration
of the Term, and consistent with good industry practice, and during any period
in which a Permitted Sublease is in effect, in the same manner and with the
same care, including regard for the status and technical condition of the
Aircraft, as shall be the case with respect to similar aircraft and engines
owned by such Permitted Sublessee without discrimination and as if the
Permitted Sublessee owned the Aircraft and was going to use the Aircraft in
continued regular customer service after the expiration of the Permitted
Sublease, and consistent with good industry practice, provided, however, that
in all circumstances the Aircraft shall be maintained by Lessee (or any
Permitted Sublessee) in accordance with maintenance standards required by, or
substantially equivalent to those required by the central civil aviation
authority of the country of registry, and, to the extent not inconsistent
therewith, the FAA and (D) so as to keep the Aircraft in as good a condition as
when delivered to Lessee, ordinary wear and tear excepted, and in good
operating condition; (ii) keep the Aircraft or cause the Aircraft to be kept in
such condition as is necessary to enable the airworthiness certification of
such Aircraft to be maintained in good standing at all times under the Federal
Aviation Act and any other applicable law, or the applicable laws of any other
jurisdiction in which the Aircraft may be registered in accordance with Section
11 of the Refunding Agreement (provided that if any grounding is fleetwide in
nature and so long as Lessee or a Permitted Sublessee is contesting in good
faith such grounding, Lessee shall not be deemed in violation of this
maintenance 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
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registered during the Restricted Use Period and, subject to Section 11 of the
Refunding Agreement, thereafter under the Federal Aviation Act in the name of
Lessor or any successor or assignee, so long as (i) while the Aircraft is
registered under the Federal Aviation Act, each of the Lessor or its successors
or assigns is a "citizen of the United States" as defined in Section
40102(a)(15) of the Federal Aviation Act and (ii) the applicable parties to the
Refunding Agreement cooperate with Lessee with respect thereto as reasonably
requested by Lessee. Lessee shall not register the Aircraft or permit the
Aircraft to be registered under any Laws other than the Federal Aviation Act at
any time except as provided in Section 11 of the Refunding Agreement and shall
cause the Indenture to be duly recorded and maintained of record as a duly
perfected mortgage on the Aircraft and this Lease at all times. At any time
after the Restricted Use Period, Lessor, upon compliance with all of the terms
of Section 11 of the Refunding Agreement, shall, at the request and sole
expense of Lessee, cooperate with Lessee to take all actions reasonably
required to change the registration of the Aircraft to another country.
Lessee agrees at its expense to place such appropriate
insignia, plates and other identification ("Lease Identification") in the
cockpit of the Aircraft and on each Engine showing title thereto and the Lien
of the Indenture as designated by Lessor and as Lessor may from time to time
reasonably request. Unless otherwise requested, upon delivery of the Aircraft,
Lessee shall fasten or cause to be fastened in the cockpit of the Airframe in a
location reasonably adjacent to and not less prominent than the airworthiness
certificate for the Aircraft, and on each Engine (if not prohibited by
applicable Law), a Lease Identification in the form set forth in Exhibit C
hereto or with any other appropriate information in any other form subsequently
designated by Lessor to Lessee. Except as provided herein, Lessee will not
allow the name of any Person to be placed on the Aircraft or either Engine as a
designation that would be reasonably interpreted as a claim of ownership or
Lien; provided, however, that Lessee may cause the Airframe and Engines to have
placed thereon the customary colors and 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
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such information concerning the location, condition, use and operation of the
Aircraft as Lessor, Owner Participant or Indenture Trustee may reasonably
request. Lessee shall permit, or cause any sublessee to permit, any person
designated by Lessor, Owner Participant or Indenture Trustee on reasonable
prior notice at reasonable times to visit, inspect and survey the Aircraft
(including, without limitation, a visual "walk around" inspection which may
include going on board the Aircraft, and inspecting the Aircraft during
maintenance checks when panels and bays are open and subject to view), its
condition, use, and operation, and the records maintained in connection
therewith, and to visit and inspect the properties and to discuss the affairs,
finances and accounts of Lessee with the principal officers of Lessee,
provided, that so long as no Default or Event of Default has occurred hereunder
inspections shall be endeavored to be performed during regularly scheduled
maintenance checks of the Aircraft. Each such inspection or survey shall be
conducted so as to not unreasonably interfere with the business of Lessee or
the maintenance or operation of the Aircraft. Upon Lessor's, Owner
Participant's or Indenture Trustee's request, Lessee will notify such Person of
the next scheduled maintenance check for the Airframe or any Engine. Lessor,
Owner Participant and Indenture Trustee shall have no duty to make any such
inspection and shall not incur any liability or obligation by reason of not
making any such inspection. Lessor's, Owner Participant's or Indenture
Trustee's failure to object to any condition or procedure observed or
observable in the course of an inspection hereunder shall not be deemed to
waive or modify any of the terms of this Lease with respect to such condition
or procedure.
Section 8. Additional Covenants of Lessee.
Lessee covenants and agrees that:
(a) Financial Information. Lessee agrees to furnish
Lessor, until the expiration or other termination of the Term of this Lease,
the following:
(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
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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);
(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
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such financial statements, and that such review has not disclosed the existence
during such accounting period, nor does such officer have any knowledge of the
existence, as at the date of such certificate, of any condition or event which
constitutes a Default or an Event of Default, or, if such condition or event
which constitutes a Default or an Event of Default existed or exists,
specifying the nature and period of existence thereof and what action Lessee
has taken or is taking or proposes to take with respect thereto or any event
classified as an accident by the National Transportation Safety Board, or if
such event has occurred, information about such event;
(vi) as soon as practicable after becoming aware
thereof, notice of damage or destruction to the Aircraft, either Engine or any
Part with a repair or replacement cost (including labor charges) in excess of
$1,000,000;
(vii) immediately after Lessee knows or should know
of the occurrence thereof, notice of a Default; and
(viii) from time to time such other information as
Lessor may reasonably request.
(b) Maintenance of Corporate Existence. Except as
provided in Section 8(e) below, during the term of this Lease, Lessee will
preserve and maintain its corporate existence and its rights, privileges,
licenses and franchises material to Lessee's ability to perform its obligations
hereunder in each applicable jurisdiction.
(c) Maintenance of Status. Lessee is, and shall remain
so long as it shall be the Lessee under this Lease, a "citizen of the United
States" as defined in Section 40102(a)(15) of the Federal Aviation Act, and
Lessee is and shall maintain its status at all times as a Certificated Air
Carrier, including, without limitation, its status so as to fall within the
purview of 11 U.S.C. Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be
paid all Taxes imposed upon it, or upon its income or profits, or upon any
property belonging to it, on or prior to the due date thereof, including any
extensions which have been duly obtained or granted; provided, however, that
Lessee shall not be required to pay any such Taxes, the payment of which is
being diligently contested in good faith and by appropriate proceedings with
appropriate reserves so
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long as there is no material possibility that either failure to pay such Taxes
or such contest may result in any loss, sale, confiscation, forfeiture or
seizure of the Aircraft, the Airframe or either Engine or any criminal
liability on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not
liquidate or dissolve; and Lessee shall not consolidate with or merge into or
with any other corporation or other Person, and Lessee shall not convey,
transfer, lease or otherwise dispose of all or substantially all of its
property and other assets (in one or a series of transactions) to any
corporation or other Person, unless:
(i) the Person formed by or surviving such
consolidation or merger or the Person which acquires by conveyance, transfer,
lease or other disposition all or substantially all of such property and other
assets or stock (the "Successor Entity"): (A) shall be a corporation organized
and existing under the Laws of the United States of America or any State
thereof or the District of Columbia; (B) immediately after giving effect to
such transaction, shall be Lessee or shall have acquired or succeeded to all or
substantially all of such property and other assets (including, without
limitation, all or substantially all of Lessee's property and other assets) as
an entirety and, unless the Owner Participant otherwise agrees, shall have a
Net Worth of not less than Lessee's Net Worth immediately prior to such
transaction; (C) shall be a "citizen of the United States" of America as
defined in Section 40102(a)(15) of the Federal Aviation Act and a Certificated
Air Carrier; and (D) shall execute and deliver to Lessor and Indenture Trustee
such recordations and filings with any Governmental Entity and such other
documents as Lessor determines shall be reasonably necessary or advisable
(including, without limitation, to preserve and protect the interests of the
Lessor and the priority of the Lien of the Indenture (if it has not been
discharged)) to evidence, or in connection with, such consolidation, merger,
sale, lease, transfer or other disposition and an agreement, in form and
substance reasonably satisfactory to Lessor, which is a legal, valid, binding
and enforceable assumption by such Successor Entity of the due and punctual
performance and observance of each covenant and condition of this Lease and the
other Operative Documents to which Lessee is a party and agreement to be bound
thereby, and an officer's certificate to such effect, and to the effect that
the other requirements of this paragraph have been satisfied, and a legal
opinion from
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counsel to such effect and otherwise in such form and substance reasonably
satisfactory to Lessor; and
(ii) prior to and immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing.
No such permitted disposition to a Successor Entity shall relieve or release
Lessee of or from any obligations hereunder or under the other Operative
Documents.
(f) Information. Within 60 days after the end of each
calendar year and within 60 days of a request by Lessor or Owner Participant,
or such shorter period as may be set forth in any written request by the
Internal Revenue Service for information or documents, Lessee shall furnish in
writing to Lessor or Owner Participant such information and documents (or
copies thereof) regarding the Aircraft as may be reasonably requested by Lessor
or Owner Participant or the Internal Revenue Service in order to permit Lessor
to file its Federal and state income tax returns (or to permit the filing of
the Federal and state income tax returns of any affiliated group of
corporations filing a consolidated return of which Lessor is a member), or to
maintain or defend any claims related thereto and promptly, after reasonable
notice, furnish to Lessor or Owner Participant such information as may be
reasonably requested by Lessor or Owner Participant or the applicable
Governmental Entity as may be required to enable Lessor or Owner Participant to
file any reports required to be filed by it with any Governmental Entity
because of its ownership or other interest in the Aircraft, the Airframe or the
Engines.
(g) Place of Business. At all times while this Lease is
in effect, Lessee will not, without thirty (30) days prior written notice to
Lessor and Indenture Trustee (so long as the Lien of the Indenture shall not
have been discharged), change its chief executive office (as such term is
defined under Article 9 of the Uniform Commercial Code as adopted in Arizona)
or location of its books and records, from 4000 East Sky Harbor Boulevard,
Phoenix, Arizona 85034,
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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 "predominantly
outside the United States" within the meaning of Section 48(a)(2) of the Code.
In addition, until the expiration of the Term or termination of the Foreign
Lease Agreement, Lessee will not locate or use or permit the location or use of
the Aircraft in, to or from Hong Kong or the People's Republic of China or in
such manner that the percentage of the income, deduction or credit attributable
to the Aircraft, Airframe or Engines for federal income tax purposes during any
taxable year of the Lessor considered to be from foreign sources exceeds the
Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
(i) Section 1110. Lessee acknowledges that Lessor would
not have entered into this amended and restated Lease unless it had available
to it the benefits of a lessor under Section 1110 of Title 11 of the United
States Code. Lessee covenants and agrees with Lessor that to better ensure the
availability of such benefits, Lessee shall support any motion, petition or
application filed by Lessor with any bankruptcy court having jurisdiction over
Lessee, whereby Lessor seeks recovery of possession of the Aircraft under said
Section 1110 and shall not in any way oppose such action by Lessor unless
Lessee shall have complied with the requirements of said Section 1110 to be
fulfilled in order to entitle Lessee to continued use and possession of the
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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 (i) 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 or (ii)
necessary in connection with the execution, delivery or performance of the
Operative Documents (other than the Lease) to which Lessee is a party or the
enforcement thereof against Lessee.
(k) Security Opinion; Annual Certificate. (i) During
such times that the Aircraft is registered under the Federal Aviation Act,
Lessee shall furnish to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period
covered by the opinion of counsel rendered on the
Restatement Date, any opinion of counsel rendered
pursuant to Section 11(C) of the Refunding Agreement,
and any opinion of counsel rendered pursuant to this
Section 8(k)(i) and (Y) upon any change in Law that
would render the opinion of counsel rendered on the
Restatement Date or such immediately preceding
opinion of counsel inaccurate, an opinion of counsel
with respect to Lessee and the FAA reasonably
satisfactory to each addressee of such opinion (which
counsel may be internal legal counsel of Lessee and
FAA counsel) stating, in the opinion of such counsel,
that such action has been taken with respect to the
recording, filing, re- recording and refiling of (i)
the appropriate Operative Documents and any
supplements and amendments thereto and (ii) such
other appropriate documents, as is necessary to
maintain the perfection of Lessor's title to and/or
interest in and Indenture Trustee's security interest
in the Aircraft and the
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Operative Documents for such period of time as
reflects the then-current applicable Law, reciting
the details of such actions; or
(2) at any time that an opinion is not required pursuant
to Section 8(k)(i)(1), annually, a certificate
reasonably satisfactory to each recipient thereof
signed by a Responsible Officer of Lessee certifying
that no such action is necessary to maintain the
perfection of such title and/or interest and security
interest.
(ii) During such times that the Aircraft is registered under
any Laws other than the Federal Aviation Act, Lessee shall furnish to Lessor
and to Indenture Trustee annually (but in any case, (X) prior to the expiration
of the time period covered by any opinion of counsel rendered pursuant to
Section 11(C) of the Refunding Agreement and any opinion of counsel rendered
pursuant to this Section 8(k)(ii) and (Y) promptly upon any change in Law that
would render such immediately preceding opinion of counsel inaccurate), an
opinion of counsel reasonably satisfactory to each addressee of such opinion
stating, in the opinion of such counsel, that such action has been taken with
respect to the recording, filing, re-recording and refiling of (i) the
appropriate Operative Documents and any supplements and amendments thereto and
(ii) such other appropriate documents, as is necessary to maintain the
perfection of Lessor's title to and/or interest in and Indenture Trustee's
security interest in the Aircraft and the Operative Documents for such period
of time as reflects the then-current applicable Law, reciting the details of
such actions.
(l) Letter of Credit. As security for the obligations to
Lessor, Lessee shall provide to Lessor, as named beneficiary thereof, one or
more irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be
available for drawdown thereunder and payable in New York, New York, on demand
at any time, if a Default under Section 17(e), (f) or (g) or an Event of
Default has
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occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect at all
times until ninety-one (91) days after the Expiration Date with a commercial
bank acceptable to Lessor, in its sole and absolute discretion, having a
long-term unsecured debt rating of "A" or better by Standard & Poor's Rating
Group (if the issuing bank's credit rating is lower than such rating, Lessee
shall replace such Letter of Credit issuer within five Business Days of any
such reduction in rating with a commercial bank meeting such rating
requirement), provided, that the Letter of Credit set forth in Exhibit D-2
issued by The Industrial Bank of Japan, Limited, will be acceptable to Lessor
for so long as The Industrial Bank of Japan, Limited maintains a long term
unsecured debt rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable and
assignable; and
(iv) permit partial drawings. If the Letter of
Credit is still in effect at the end of the Term, or the Lessor is holding
proceeds of the Letter of Credit that were retained and not applied as provided
herein, then Lessor shall return the Letter of Credit to Lessee or terminate
it, and/or return any retained and unapplied proceeds, ninety-one (91) days
following the date of such expiration or other termination of this Lease so
long as no Default or Event of Default has occurred or is continuing hereunder
or under any Other Lease, upon payment in full of all amounts then due and
owing to Owner Trustee and Owner Participant under the Operative Documents.
If an Event of Default has occurred or is continuing under
this Lease or an Event of Default has occurred or is continuing under any Other
Lease (as therein defined), in addition to any other rights and remedies Lessor
may have hereunder, under any Other Lease, any sublease and any and all other
remedies available at Law (including, without limitation, the Uniform
Commercial Code as adopted in New York) or equity and upon exercising its
rights under the Letter of Credit and any Other Letters of Credit, Lessor shall
be entitled, in each case as it may elect in its sole and absolute discretion,
to (i) hold any amounts drawn under the Letter of Credit or Other Letters of
Credit as security for Lessee's obligations under this Lease
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or the Other Leases, (ii) retain any amounts drawn under the Letter of Credit
or Other Letters of Credit for its own account and apply (including, without
limitation, by way of set off against) such drawn amounts as it may elect (it
being understood that amounts not so applied will be held as security for
Lessee's obligations under this Lease and the Other Leases) to remedy any
breach by Lessee of this Lease or any other Operative Documents or Other Leases
or (iii) recompense Lessor, Owner Participant or any of their respective
Affiliates for any loss, damage, cost or expense or other Claim due or owing
hereunder or under the Other Leases; provided, however, that in the case of any
drawing in respect of any claim for the payment of Rent, Lessee's right to
apply the same to such claim shall be limited to amounts which would (absent
such Event of Default) be distributable under the Indenture at the time such
payment is made to Lessor, Owner Participant or any of their respective
Affiliates (and shall not include any amounts distributable to Indenture
Trustee in its individual capacity or to the Note Holders); provided further,
however, that neither the amount so applied at any one time nor the aggregate
amount so applied at different times shall reduce the amount of any installment
or payment of Rent (whether upon the termination of the Lease or otherwise)
payable by Lessee to an amount insufficient to pay in full the amounts required
to be paid on account of the principal of and any interest on the Equipment
Notes or otherwise owing to a Note Holder. Lessee shall not be entitled to any
refund or credit with respect to any amounts so applied. Any amount retained
shall be considered the property of Lessor and Lessor may commingle such amount
with its general funds and Lessee, further, hereby absolutely and irrevocably
disclaims, to the maximum extent permitted by applicable Law, any interest
therein. Lessee shall not be entitled to any interest or other earnings on
such retained amount and such amount shall not be refundable.
On application of all or any portion of the amounts drawn
under the Letter of Credit or any Other Letters of Credit in accordance with
this Section 8(l) or the Other Leases, Lessee shall on demand reinstate the
amount of the Letter of Credit or Other Letters of Credit, as the case may be,
to its or their full Face Amount or provide to Lessor one or more additional
Letters of Credit meeting the requirements of this Section 8(l), so that the
Letter of Credit and each of the Other Letters of Credit at all times equals
the original Face Amount provided for herein. During such times as Lessor
shall elect to hold all or part of the proceeds of the Letter of Credit or
Other Letters of Credit as security for Lessee's obligations to Lessor under
the Lease and the Other Leases, Lessee shall not be obligated to reinstate the
amount of the Letter of
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Credit or Letters of Credit, as the case may be, in respect of the proceeds so
held.
Section 9. Replacement of Parts; Alterations, Modifications
and Additions.
(a) Replacement of Parts. Lessee, at its own cost and
expense, will promptly replace, or cause to be replaced, all Parts which may
from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for
any reason whatsoever. In addition, in the ordinary course of maintenance,
service, repair, overhaul or testing, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may at its own cost and expense remove any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or permanently rendered unfit for use, provided that
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee) shall
replace at its own cost and expense such Parts as promptly as possible. All
replacement Parts shall be free and clear of all Liens (except for pooling
arrangements to the extent permitted by paragraph (c) of this Section and
Permitted Liens), be in at least the equivalent or better modification status
and service bulletin accomplishment status, be fully interchangeable as to
form, fit and function and shall be in as good operating condition as, and have
a value, remaining useful life and utility at least equal to, the Parts
replaced (assuming such replaced parts were in the condition and repair in
which they were required to be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft
shall remain the property of Lessor (provided that, so long as the Foreign
Lease Agreement is in effect, title to such Parts shall remain with the 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
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replacement Part shall become subject to the Lien of the Indenture (if it has
not been discharged) and this Lease and be deemed a Part for all purposes
hereof to the same extent as the Part which it has replaced.
(b) Alterations, Modifications and Additions. Lessee, at
its own cost and expense, shall make or cause to be made such alterations and
modifications in and additions to the Airframe and each Engine to the extent
made mandatory for Lessee (or a sublessee) in respect of the Aircraft, Engines
or Parts from time to time to meet the applicable standards of the FAA or under
any Law of any Governmental Entity having jurisdiction or issued by the
manufacturer of the Airframe, Engines or Parts. In addition, so long as no
Default or Event of Default has occurred and is continuing, Lessee (or, if a
Permitted Sublease is in effect, a Permitted Sublessee), at its own expense,
may from time to time make such alterations and modifications in and additions
to the Airframe and either Engine as Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may deem desirable in the proper conduct of its
business, provided, no such alteration, modification or addition diminishes the
value, remaining useful life or utility, or impairs the condition or
airworthiness, of the Airframe, either Engine or any Part below that
immediately prior to such alteration, modification or addition assuming that
the Airframe, Engines and Parts were then of the value, utility and remaining
useful life and in the condition and airworthiness required by the terms of
this Lease. Except as otherwise provided herein, title to all Parts
incorporated or installed in or attached or added to the Aircraft as the result
of such alteration, modification or addition, shall immediately vest in Lessor
(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
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installed in or attached or added to the Aircraft pursuant to the terms of
Section 6 or this Section 9 or to maintain the insurance required by Section 12
and (iii) such Part can be removed from the Aircraft without causing any
material damage thereto and without diminishing or impairing the value,
utility, remaining useful life, condition or airworthiness which the Aircraft
would have had at such time had such alteration, modification or addition not
occurred. Upon the removal by Lessee of any such Part as provided in the
preceding sentence, title thereto shall, without further act, vest in Lessee
(or, if a Permitted Sublease is in effect, a Permitted Sublessee) and such Part
shall no longer be deemed part of the Aircraft (such a part is herein called a
"Removable Part"). Any Part not removed by Lessee as above provided prior to
the return of the Aircraft to Lessor hereunder, whether pursuant to Section 16,
Section 18 or otherwise, shall remain the property of Lessor (provided that, so
long as the Foreign Lease Agreement is in effect, title to such Parts shall
remain with the 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
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Aircraft as a result of such removal and make all other repairs which are
advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) replaces a Part which is not required to be replaced
under Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) may remove the replacement Part so long as it
reinstalls the original Part and such original Part is free and clear of all
Liens, other than Permitted Liens, is in at least the same modification status
and service bulletin accomplishment status, is fully interchangeable as to
form, fit and function, has been overhauled, repaired and inspected by an
agency acceptable to the FAA or other Governmental Entity having jurisdiction,
and is in as good operating condition as, and has a utility, remaining useful
life and a value at least equal to that of such Part when it was removed from
the Aircraft.
Notwithstanding any other provision hereof, and without
limiting the foregoing, Lessee (or, if a Permitted Sublease is in effect,
Permitted Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title
thereto and the rights of the owners thereof therein shall not constitute a
default hereunder; provided that (i) any such Excluded Property shall be
removed prior to the date of a Return Occasion without causing any damage to
the Aircraft and without diminishing or impairing the value, utility, remaining
useful life or condition which the Aircraft would have had at such time had
such Excluded Property not been installed, (ii) any equipment or seats which
such Excluded Property replaces shall be properly stored with the interests of
Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee,
duly noted thereon and acknowledged by any applicable bailee or warehouse, and
properly reinstalled on the Aircraft prior to the date of a 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.
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(c) Pooling. Any Part removed from the Airframe or
either Engine as provided in Section 9(a) may so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom be
subjected by Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) to a normal pooling arrangement customary in the airline industry of
which Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee)
is a part entered into in the ordinary course of Lessee's or such Permitted
Sublessee's business, provided the Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with
Section 9(a) as promptly as possible, and in any event within sixty (60) days,
after the removal of such removed Part. In addition, any Replacement Part when
incorporated or installed in or attached to the Airframe or any Engine in
accordance with Section 9(a) may be owned by another Person subject to such a
normal pooling agreement; provided, however, that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee), at its own expense, as promptly
thereafter as possible, and in any event within sixty (60) days, either (i)
causes title to such replacement Part to vest with Lessor (or, so long as the
Foreign Lease Agreement is in effect, Foreign Lessor) in accordance with
Section 9(a) (and to be subjected to the Lien of the Indenture if it has not
been discharged) by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) acquiring title thereto for the benefit of and
transferring title to 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.
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Section 10. General Tax Indemnification.
(a) Indemnity. Lessee agrees that each payment of Basic
Rent hereunder shall be free and clear of, and without deduction for, any and
all withholdings on account of Taxes of any nature whatsoever, whether or not
an exclusion pursuant to Section 10(b) applies, except as required by law. If
any such deduction or withholding of Taxes is required with respect to such
payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after such deduction or
withholding, will be equal to all such amounts that would be received by Lessor
if no such deduction or withholding had been required, but only to the extent
necessary to ensure that the holders of the outstanding Equipment Notes receive
such amount as may be required by the Indenture. If Lessee pays any amount to
Lessor (or to any taxing authority for the account of Lessor) as a result of
the application of the preceding sentence with respect to any withholding Tax
which is an excluded tax in respect of Lessor pursuant to Section 10(b), then
Lessor (or, in the case of Taxes imposed on the Owner Trustee, the Owner
Participant to the extent such Tax would give rise to a Lessor's Lien for which
the Owner Participant would be liable) shall reimburse Lessee for such
withholding Tax within 30 days of written notice accompanied by evidence of
payment for such withholding Taxes (exclusive of interest, penalties and
additions to Tax) paid by Lessee provided that in any circumstance in which the
Lessor is required to reimburse the Lessee for any such withholding Taxes and
the Lessee has not received such reimbursement from Lessor or the Owner
Participant, then to the extent of such shortfall and so long as no Lease Event
of Default has occurred and is continuing, Lessee shall be entitled to obtain
reimbursement from Lessor by reducing the succeeding payments of Rent payable
to Lessor (other than any portion of Rent that may be required by the Indenture
to be paid to the holders of any outstanding Equipment Notes issued thereunder)
until the aggregate amount of reduction is equal to the sum of the amount of
such shortfall and interest on that amount at the Interest Rate from the date
reimbursement is required to be made until the date of such reduction in Rent.
Except as provided in Section 10(b), and taking into account any payments
received by Lessor pursuant to the second sentence of this Section 10(a),
Lessee agrees to pay, and to indemnify and hold each Indemnitee harmless from,
any and all taxes (including, without limitation, sales, personal property,
transfer, fuel, leasing, use, registration, occupational, license, value added,
excess
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profits, excise, gross receipts, franchise, stamp, income and minimum taxes),
levies, withholdings, assessments or other taxes, duties or charges of any
nature, together with any fines, penalties, charges or interest thereon
(collectively, "Taxes"), howsoever levied or imposed, whether levied or imposed
upon or with respect to or asserted against any Indemnitee, Lessee, the
Aircraft, the Airframe, any Engine or any Part thereof or interest therein, or
otherwise, with respect to any period beginning, or events or circumstances
occurring, on or after the Restatement Date, by any Federal, state or local
government or taxing authority in the United States of America or by any
foreign government or any taxing authority or governmental subdivision of a
foreign country or of a territory or possession of the United States (each such
governmental subdivision or taxing authority referred to as a "Taxing
Authority"):
(i) upon or with respect to, based upon or measured
by (A) the Aircraft, the Airframe, any Engine or any Part thereof,
or interest therein, (B) the manufacture, purchase, ownership,
delivery, leasing, acceptance, rejection, assigning, possession,
use, operation, location, settlement of any insurance claim, sale,
mortgaging, pledging, financing, subleasing, rental, retirement,
abandonment, registration, 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; (C) the rentals, receipts, income or earnings arising
therefrom (including without limitation the Rent) or (D) interest,
principal and other amounts paid or payable with respect to the
Equipment Notes, 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,
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supplement, issuance, reissuance, refinancing or delivery of any
of the foregoing, or
(iii) the Trust Indenture Estate or the property, or
the income or other proceeds received with respect to the
property, held by the Indenture Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or
premium on, or other amounts payable with respect to the Equipment
Notes, whether as originally issued or pursuant to any
refinancing, modification or reissuance or any other obligation
evidencing any new loan, or
(v) otherwise with respect to or in connection with
the transactions contemplated by the Operative Documents.
(b) Exclusions. The following Taxes shall not be
subject to indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes imposed
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 item of tax preference)
imposed by the Federal government of the United States of America
(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 or property Taxes),
(ii) In the case of any Indemnitee, Taxes imposed on,
based on, or measured by the 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 included in the calculation of an after-tax payment, Taxes
in the nature of sales Taxes, use Taxes, license Taxes or property
Taxes, and Covered Income Taxes described in subsection (c) of
this Section 10),
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(iii) In the case of any Indemnitee, Taxes which 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 sale, transfer of
title, transfer or other disposition by such Indemnitee or a
related Indemnitee (for such purpose, Owner Trustee, Owner
Participant and the general partners of 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) 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 other than a disposition
attributable to the exercise of default remedies under the Lease,
or in the case of a default caused by the acts or omissions of
Lessee, any sublessee, assignee, or successor of Lessee or person
in possession of the Aircraft, default remedies under the
Indenture,
(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,
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(vii) In the case of an Indemnitee other than the
Indenture Trustee or the Trust Indenture Estate, Taxes which arise
out of or are caused by (i) any breach of an obligation required
by the Operative Documents or material misrepresentation of such
Indemnitee, or (ii) a failure by such Indemnitee to fulfill its
contest obligations, provided such failure adversely affects such
Indemnitee's ability to contest, and, in the case of the Indenture
Trustee or the Trust Indenture Estate, Taxes imposed as a result
of a breach of such Indemnitee's representations, warranties or
covenants contained in Section 9(a), 12, or 16 of the Refunding
Agreement in any material respect, or from a failure by such
Indemnitee to fulfill its contest obligations,
(viii) So long as no Event of Default shall have
occurred and be continuing, Taxes attributable to the Aircraft
related to acts or events occurring after the later of the
termination of the Lease and the redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each
Pass-Through Trustee (in its individual capacity and as trustee
under the Pass-Through Trusts), the Subordination Agent and each
Liquidity Provider, United States withholding taxes imposed as a
result of the place of organization or other status of a holder of
an interest in a Pass-Through Trust,
(x) In the case of the Indenture Trustee, each
Pass-Through Trust, each Pass-Through Trustee (in its individual
capacity), the Subordination Agent and each Liquidity Provider,
Taxes imposed with respect to the Equipment Notes as a result of
activities of such Indemnitee unrelated to the transactions
contemplated by the Operative Documents, and
(xi) In the case of a general partner of the Owner
Participant, any Taxes to the extent such Taxes when added to the
Taxes of the same type imposed on Owner Participant and all other
general partners and which are subject to indemnification, exceed
the Taxes that would have been imposed on Owner Participant alone
had Owner Participant been a U.S. corporation (it being understood
that in the case of multiple general partners, the Taxes subject
to this exclusion shall be apportioned pro-rata in accordance with
each general partner's interest in the partnership.
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For purposes of the exclusions provided in this Section
(b), references to "such Indemnitee" shall mean, in the case of Owner
Participant, Owner Participant or any partner of Owner Participant, and in the
case of each general partner of Owner Participant, Owner Participant or any
other partner or partners of Owner Participant.
Notwithstanding anything to the contrary contained in this
Section 10 (other than Section 10(b)(xi)), the provisions of this Section 10(b)
shall not apply to, and Lessee shall hold each Indemnitee harmless against, and
indemnify each Indemnitee on an after-tax basis (as provided under Section
10(e)) for, any Taxes imposed by any Taxing Authority, with respect to any
period beginning, or events or circumstances occurring, on or after the
Restatement Date in connection with or relating to the transactions undertaken
pursuant to the Foreign 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 Foreign Financing Documents)
including, without limitation, Taxes based on or measured by gross or net
income or receipts, 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 Foreign Lessor by any Indemnitee
pursuant to the Foreign 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 by reason of the terms and conditions of
the Operative Documents or the exercise of any rights specifically granted
thereunder.
(c) Covered Income Tax. For purposes of subsection
(b)(i) and (b)(ii) of this Section 10, a Covered Income Tax means
(i) in the case of any Indemnitee other than 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 (other
than taxes which are in the nature of sales or use taxes, license
taxes or property taxes) imposed on an Indemnitee by any state or
local Taxing Authority in whose jurisdiction such Indemnitee did
not otherwise have sufficient business activities or business
presence to be subject to tax solely as a result of (x) the
operation of the Aircraft in such jurisdiction or (y) the
transactions contemplated by the Operative Documents, to the
extent such taxes are directly attributable to such operation of
the Aircraft or to such transactions. For purposes of determining
whether or not the Indemnitee engaged in business, maintained an
office or other place of
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business or was otherwise located in the jurisdiction of a Taxing
Authority, Indemnitee shall be defined as including all entities
with which such Indemnitee is combined, integrated or consolidated
in such Taxing Authority's jurisdiction;
(ii) in the case of any Indemnitee other than 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 (other
than taxes which are in the nature of sales or use taxes, license
taxes, or property taxes) imposed on such Indemnitee by any
foreign jurisdiction (i) 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 Operative
Documents or (ii) which are withholding taxes on Basic Rent to the
extent such withholding taxes would otherwise result in Basic Rent
payments being insufficient to cover principal and interest
payments on the Equipment Notes;
(iii) 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; and
(iv) in the case of the Indenture Trustee or the Trust
Indenture Estate, a tax imposed by any Taxing Authority other than
the Federal government of the United States of America based on,
or measured by gross income or receipts (including minimum taxes,
withholding taxes, and taxes on or measured by any item of tax
preference), to the extent such Tax is
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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,
sublessee, or any Affiliate of either thereof in such
jurisdiction, including residence.
(d) Reports and Returns. In case any report or
return is required to be made by Lessee with respect to any Taxes which are
subject to indemnification by Lessee under this Section 10, Lessee will either
make such report or return in such manner as will show the ownership of the
Aircraft in Owner Trustee or the interest of Owner Participant or its permitted
assigns and send a copy of such report or return to 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 (as determined, in the case of the Owner Participant, on a
hypothetical basis based on the assumption that Owner Participant is subject to
the highest federal corporate income tax rate applicable in the year of payment
and the State Rate (as defined below). For this purpose, "State Rate" shall
mean the actual state and local tax rate imposed upon the Owner Participant,
taking
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into account all available allocations, apportionments, credits and deductions,
such information to be provided by the certification of a Responsible Officer
of Owner Participant (the "Certification"). At the request of the Lessee and
at the Lessee's expense, the accuracy of such information shall be verified by
the firm of certified public accountants regularly employed by the Owner
Participant, or any other national firm of independent certified public
accountants selected by Owner Participant and reasonably acceptable to Lessee.
The Certification as verified as described in the preceding sentence (if
requested by Lessee) shall be conclusive and binding on all parties. In no
event shall Owner Participant be required to make available or disclose any tax
returns or related information to any parties other than the certified public
accountants verifying the Certification.
(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
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 reduction calculated on
the same basis as the Gross-Up 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
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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 or Section 13, 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, shall
in good faith contest or shall permit Lessee, if desired by Lessee and, in the
case of a contest involving Owner Participant, permitted by Owner Participant,
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, that the Indemnitee shall not be required
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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) a threshold amount of $75,000 for any individual
claim and $150,000 for recurring claims is at issue,
(iii) 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 for the initial
administrative or judicial contest and that the Indemnitee is more
likely than not to prevail in any appeal of a trial court
decision, and (b) agreed to pay Indemnitee for all reasonable
costs and expenses which Indemnitee may incur in contesting such
claim,
(iv) there is no substantial risk of forfeiture of the
Aircraft,
(v) if such contest is to be initiated by the payment
of, and the claiming of a refund for, such Taxes, Lessee shall
advance or cause to be advanced to such Indemnitee (if such
Indemnitee is the Indenture Trustee or the Trust Indenture Estate)
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,
(vi) no claim shall be appealed to the U.S. Supreme
Court, and
(vii) Lessee shall have admitted its liability to
indemnify Owner Participant should a proposed adjustment prove to
be correct, provided that such admission may be conditioned on a
binding judicial or administrative adjudication of Lessee's
responsibility to indemnify Owner Participant, and provided
further that in no event will such adjudication cause Lessee to
delay in fulfilling its contest obligations.
(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
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thereon attributable to the Taxes paid or advanced by Lessee less the amount of
any Taxes payable by such Indemnitee in respect of the receipt of such refund
and interest after giving credit to Lessee for any savings by such Indemnitee
in respect to any such Taxes by reason of deductions, credits, allocations or
allowances in respect of the payment of any such Taxes; provided that such
amount shall not be payable before such time as Lessee shall have made all
payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in
default under any of the above indemnification provisions of this Section 10 so
long as Lessee or the Indemnitee shall diligently prosecute such contest in
accordance with the provisions of this Section 10. Notwithstanding the
foregoing, if a claim is made against any Indemnitee for any Taxes which, if
successful, would result in the imposition of Taxes under circumstances which
would require Lessee to indemnify such Indemnitee, the Indemnitee shall be
released from its responsibility to contest such claim, or part thereof, if it
agrees in writing not to seek indemnification from Lessee in respect of the
claim, or such part thereof to be contested. In the event an Indemnitee fails
to contest, or refuses to permit Lessee to contest, a claim or part thereof
which the Indemnitee has the obligation to contest or to permit Lessee to
contest under this Section 10, then Lessee shall not be obligated to indemnify
the Indemnitee for such claim or such part thereof.
(k) Affiliated Group. In the event that the
Indemnitee is a member of an affiliated group (within the meaning of Section
1504(a) of the Code) which files a consolidated Federal income tax return, the
term "Indemnitee" shall mean and include such affiliated group.
(l) Survival. The provisions of this Section 10
shall survive the expiration or termination of any of the Operative Documents.
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
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Event of Loss with respect to the Airframe or the Airframe and any Engines then
installed thereon, Lessee shall forthwith (and, in any event, within five (5)
Business Days after such occurrence) give Lessor written notice of such
occurrence and within thirty (30) days after such occurrence give Lessor
written notice of its election, subject to the terms hereof and of the
Indenture, to perform one of the following two options (it being agreed that if
Lessee shall not have given Lessor notice of such election within thirty (30)
days after such occurrence, Lessee shall be deemed to have elected to perform
the option set forth in the following clause (ii)), provided, that Lessee shall
not have the right to select the option set forth in clause (i) if a Default or
an Event of Default shall have occurred and be continuing at the time of such
election or at the time of replacement or if the Foreign Lease Agreement does
not permit such replacement or requires the payment of additional amounts
thereunder (unless Lessee in its election pays such amounts 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 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
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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,
Head Lessor's Liens and any Lien arising out of the Foreign Lease Agreement),
all of Lessor's right, title and interest, if any, in and to the Airframe and
the Engines suffering the Event of Loss as well as all of Lessor's right, title
and interest in and to any Engine constituting part of the Aircraft and
replaced as provided above but not installed thereon at the time of the Event
of Loss. For all purposes hereof, a replacement Airframe shall be deemed part
of the property leased hereunder and shall be deemed the "Airframe" as defined
herein. No Event of Loss resulting in replacement of the Airframe or Engines
under this Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or
before one hundred twenty (120) days after the date of the Event of Loss (or,
if earlier, with respect to insurance proceeds, on the date on which insurance
proceeds with respect to the Event of Loss are received by the loss payee)
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
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Stipulated Loss Value is paid shall terminate; provided that Lessee shall
remain liable for, and shall pay on or before the date the Stipulated Loss
Value and Supplemental Rent are paid, all payments of Basic Rent or Renewal
Rent, as the case may be, for the Aircraft due on or before the date of such
payment of Stipulated Loss Value and Supplemental Rent, (2) the Term shall
terminate with respect to such Aircraft, and (3) Lessor will, subject to the
rights of any insurers, transfer to Lessee, "AS IS, WHERE IS," without
recourse, representation or warranty (except a warranty that such Airframe and
Engines are free and clear of Lessor's Liens and Liens arising out of the
Foreign Lease Agreement), all of Lessor's right, title and interest, if any, in
and to the Airframe and Engines suffering the Event of Loss, as well as all of
Lessor's right, title and interest, if any, in and to any Engine constituting
part of the Aircraft but not installed thereon at the time of the Event of
Loss.
(b) Event of Loss with Respect to an Engine. Upon an
Event of Loss with respect to an Engine only, Lessee shall give Lessor prompt
written notice thereof and shall, at its own cost and expense, within sixty
(60) days after such occurrence 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 Owner Participant and Indenture Trustee, as
applicable, with respect to such replacement Engine; (ii) cause supplements, in
form and substance reasonably satisfactory
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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 then 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 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 (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), the replacement of the Engine suffering the Event of
loss with the Replacement Engine is in accordance with the provisions of this
Agreement and Foreign Lease Agreement (if then in effect), and the Replacement
Engine is subject to the Lien of the Indenture (if it has not been discharged),
the instruments subjecting such Replacement Engine to the Lien of the Indenture
and the Lease, and subjecting to any relevant Assigned Sublease and Sublease
Agreement, as the case may be, have been duly filed for recordation pursuant to
the Federal Aviation Act or any other law then applicable to the registration
of the Aircraft, and no further action, filing or recording of any document is
necessary in order to establish and perfect, in the United States and, if the
Aircraft is registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Engine and the Lien of the
Indenture on such Replacement Engine; (v) furnish a certificate signed by a
Responsible Officer of Lessee certifying that, upon consummation of such
replacement, no Default or Event of Default will exist hereunder; (vi) furnish
such documents and evidence with respect to Lessee, Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged), as
such parties or their respective counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this Section
11(b), the taking of all corporate proceedings in connection therewith and
compliance with the conditions set forth in this Section 11(b), in each case in
form and substance satisfactory to such party; (vii) furnish such Uniform
Commercial Code financing statements covering the Replacement Engine as may be
requested by Lessor or Indenture Trustee (if the Lien of
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the Indentures has not been discharged); (viii) furnish Owner Participant with
an opinion of tax counsel mutually satisfactory to Owner Participant and Lessee
and which opinion is reasonably satisfactory to Owner Participant to the effect
that such replacement will have no adverse tax consequences to Lessor and Owner
Participant; (ix) furnish the appraisal referred to above; and (x) furnish
Owner Trustee and Indenture Trustee with the opinion of counsel to Lessee
specified in Section 5.06(a)(5)(i) of the Indenture. Upon full compliance by
Lessee with the terms of this Section 11(b), Lessor will, subject to the rights
of any insurers, transfer to Lessee, "AS IS, WHERE IS" without recourse,
representation or warranty (except a warranty that such Engine is free and
clear of Lessor's Liens, 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 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, the 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
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Participant) of Lessee's counsel (and such other evidence of title as Owner
Participant or Indenture Trustee (if the Lien of the Indenture has not been
discharged) may reasonably request) to the effect that, upon such conveyance,
Lessor will acquire good title to (or, so long as the Foreign Lease Agreement
is in effect, beneficial ownership of) such replacement Airframe free and clear
of all Liens (it being understood that, upon such conveyance, such replacement
Airframe may be subject to Permitted Liens), that such replacement Airframe
will be leased hereunder and under the Foreign Lease Agreement (if then in
effect) to the same extent as the Airframe replaced thereby and will be subject
to the Lien of the Indenture (if it has not been discharged), the instruments
subjecting such Replacement Airframe and Replacement Engine to the Lien of the
Indenture and the Lease, and subjecting to any relevant Assigned Sublease and
Sublease Assignment, as the case may be, have been duly filed for recordation
pursuant to the Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or recording of any
document is necessary in order to establish and perfect, in the United States
and, if the Aircraft is registered outside the United States, in the
jurisdiction of registration, the legal title to such Replacement Airframe and
Replacement Engine and the Lien of the Indenture on such Replacement Airframe
and Replacement Engine, and that Lessor, and Indenture Trustee as 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
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Governmental Entity and Lessee has temporary or permanent authority to operate
the replacement Airframe; (vi) furnish such Uniform Commercial Code financing
statements covering the replacement Airframe as may be reasonably requested by
Lessor or Indenture Trustee; (vii) furnish Owner Participant with an opinion of
tax counsel mutually satisfactory to Owner Participant and Lessee and which
opinion is reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the
same were maintained in accordance with the requirements of this Lease whether
or not they are in fact so maintained; and (ix) furnish Owner Trustee and
Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms
of this Section 11(c), Lessor will, subject to the rights of any insurers,
transfer to Lessee "AS IS, WHERE IS," without recourse, representation or
warranty (except a warranty that such Airframe is free and clear of Lessor's
Liens, Head Lessor's liens, and liens arising out of 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
(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):
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(i) unless clause (ii) below is applicable,
so much of such payments as shall not exceed the Stipulated Loss Value and
other payments required to be paid by Lessee pursuant to Section 11(a)(ii) of
this Lease shall be paid to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and other payments, if not already paid by Lessee,
or, if already paid by Lessee, shall (unless a Default or an Event of Default
shall have occurred and be continuing) be applied by Lessor to reimburse Lessee
for its payment of such Stipulated Loss Value and other payments and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result
of an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such
payments shall be paid over to, or retained by, Lessee if Lessee shall have
fully performed or, concurrently therewith fully performs, the terms of
Sections 11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of
Section 15 hereof with respect to the Event of Loss for which such payments are
made and if no Default or Event of Default shall have occurred and be
continuing.
(e) Requisition for Use by Government with Respect to
the Aircraft. Subject to Section 11(f) below, in the event of the requisition
for use by a Governmental Entity of the Aircraft, the Airframe or an Engine
(other than a requisition constituting an Event of Loss), Lessee shall promptly
notify Lessor and Indenture Trustee (if the Lien of the Indenture has not been
discharged) thereof and all of Lessee's obligations under this Lease with
respect to such Airframe or Engine shall continue to the same extent as 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
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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
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
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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, the
general partners of 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, the general partners of 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 or additional insured by any act or omission of
Lessee or any other insured or additional insured and shall insure Lessor,
Owner Participant, the general partners of Owner Participant, Indenture
Trustee, Foreign Lessor, Foreign Lessee, Foreign Lender 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, the general partners of
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, the general partners of 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
the insurance industry standard for war/allied perils coverage), after notice
to Lessor, Owner Participant, the general partners of Owner Participant,
Foreign Lessor, Foreign Lessee, Foreign Lender 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
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Participant, the general partners of Owner Participant, Indenture Trustee,
Foreign Lessor, Foreign Lessee, Foreign Lender and the other Indemnitees, and
their respective permitted assigns, each insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, the general partners of 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, the general partners of 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, the general partners
of Owner Participant, Indenture Trustee, Foreign Lessor, Foreign Lessee,
Foreign Lender and the other Indemnitees than that carried by Lessee with
respect to other A320-231 aircraft or similar-size aircraft owned or leased by
Lessee.
(b) Insurance Against Loss or Damage. Lessee, at its
own expense, will maintain in effect, or cause to be carried and maintained in
effect, with Approved Insurers "all-risk" ground and flight aircraft hull
insurance (which shall include, but not be limited to, hijacking, a
disappearance clause and coverage against strikes, riots, commotions or labor
disturbances, air piracy, malicious acts or acts of sabotage and unlawful
seizure or wrongful exercise of control of the Aircraft in flight by a person
on board such Aircraft acting without the consent of Lessee) covering the
Aircraft, and "all-risk" coverage including transit insurance with respect to
Engines and Parts while not installed on such Aircraft or an aircraft, which in
each case considering all policy terms, limitations and
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exclusions is of the type, terms and amount customarily maintained by prudent
Certificated Air Carriers similarly situated to Lessee and operating similar
size aircraft and engines and as hereinafter provided. Lessee shall also
maintain, or cause to be maintained, war risk and allied perils hull insurance
reasonably acceptable to Lessor with Approved Insurers. In addition, at least
ten (10) Business Days (or, in the case of an emergency, at least two (2)
Business Days) prior to permitting the Aircraft, Airframe or Engines to be
operated or located outside of the United States of America, other than in
Canada or Mexico, Lessee shall notify Lessor thereof. If Owner Participant or
Indenture Trustee reasonably requests at any time and if such insurance is then
customarily being obtained by or for Persons leasing or financing
similarly-sized aircraft operating on similar routes to operators located in
the jurisdiction of Lessee's or, if a Permitted Sublease is in effect, the
Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or reimburse
Lessor for political risk, repossession, expropriation, confiscation and
similar insurance as Lessor may arrange or cause to be arranged; provided that
Indenture Trustee shall not be obligated to request such insurance and shall
not be liable for any failure to request such insurance. Anything herein to
the contrary notwithstanding, at all times while the Aircraft is subject to
this Lease, the insurance required by this Section 12(b) shall be for an amount
on an "agreed value" basis not less than the Stipulated Loss Value from time to
time determined for the Aircraft. Without limiting the foregoing, the type and
amount of insurance carried by Lessee hereunder shall be no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and maintained
pursuant to this Section 12(b), and each and any policy obtained in
substitution or replacement for any such policies, (i) shall designate Lessor
as owner of the Aircraft, shall designate, so long as the Lien of the Indenture
has not been discharged, Indenture Trustee and, thereafter, Lessor, as sole
loss payee, as provided below and shall designate Lessor, Owner Participant,
Indenture Trustee (in both its individual capacity and its trustee capacity)
and the other Indemnitees and their respective permitted assigns as additional
insureds, as their respective interests may appear (but without imposing upon
Lessor, Owner Participant, Indenture Trustee and the other Indemnitees and
their respective permitted assigns, any
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obligation imposed upon the insured, including, without limitation, the
liability to pay any premiums for any such policies), (ii) shall expressly
provide that, in respect of the interests of such an additional insured and its
permitted assigns, in such policies, the insurance shall not be invalidated as
to an insured by any act or omission of Lessee or any other additional insured,
and shall insure each such additional insured and its permitted assigns,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their
respective permitted assigns, or if such insurance is allowed to lapse, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee, the other Indemnitees or their respective
permitted assigns, until thirty (30) days (seven (7) days or such lesser period
of time as is the insurance industry standard for war/allied perils coverage)
after written notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, as the case may be, of such prospective cancellation,
change or lapse, (iv) shall include coverage for any country in or over which
the Aircraft may at any time be located or operated, (v) shall provide that, as
against Lessor, Owner Participant, Indenture Trustee, 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
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incorporate deductible amounts which shall not exceed one million dollars
($1,000,000).
Each of Lessor, Owner Participant, the general partners of
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,
Owner Participant or the general partners of Owner Participant with respect to
the Aircraft. Lessee shall have the right to carry insurance in excess of the
amounts required hereunder and the proceeds of such excess insurance shall be
payable to Lessee, provided, however, that such insurance does not conflict
with or adversely affect the insurance required hereunder or any excess or
contingent insurance carried by Lessor, Foreign Lessor, Owner Participant or
the general partners of Owner Participant. Lessee shall give Lessor reasonable
prior written notice of any insurance to be carried by Lessee in addition to
that required to be carried by Lessee as provided herein.
In the event that separate policies are maintained to
cover "all-risk" ground and flight aircraft, hull and war risks and allied
perils insurance, Lessee shall include a 50/50 provisional claims settlement
clause as contained in the policies of insurance maintained by Lessee with
respect to all other aircraft in Lessee's fleet, and a copy of the 50/50
provisional claims settlement clause in effect on the Restatement Date shall be
attached to the insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of
Loss. It is agreed that insurance payments which arise from insurance required
to be carried by Lessee pursuant to this Section 12 and received as the result
of the occurrence of an Event of Loss shall be applied as follows (after
reimbursement of Lessor, Owner Participant, 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 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
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Lessee's obligation to pay such Stipulated Loss Value and any other payments if
not already paid by Lessee, or, if already paid by Lessee, shall (unless a
Default or an Event of Default shall have occurred and be continuing) be
applied by Indenture Trustee or Lessor, as the case may be, to reimburse Lessee
for its payment of such Stipulated Loss Value and other payments and the
balance, if any, of such payment remaining thereafter shall be paid over to, or
retained by, Lessor; or
(ii) if such payments are received as a result
of an Event of Loss with respect to the Airframe or an Engine which is being
replaced pursuant to Section 11(a)(i) or Section 11(b) hereof, all such
payments shall be paid over by the Indenture Trustee or Lessor, as the case may
be, to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Section 11(a)(i) and (c) or
Section 11(b) hereof, as the case may be, and of Section 15 hereof with respect
to the Event of Loss for which such payments are made and if no Default or
Event of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than
an Event of Loss. The insurance payments of any property damage loss to the
Airframe or any Engine not constituting an Event of Loss with respect thereto
will be applied in payment for the actual costs of repairs or for replacement
property which Lessee has incurred in accordance with the terms of Section 9,
11 or 12(c) of this Lease against such documentation evidencing payment by
Lessee as Lessor may reasonably request to reimburse Lessee for such repairs or
replacements already paid for by Lessee, and any balance remaining after
compliance with such Sections with respect to such loss shall be paid to
Lessor. Lessee shall be entitled to receive from the insurer any insurance
proceeds not in excess of five hundred thousand dollars ($500,000) as soon as
such funds are paid and shall promptly receive such additional insurance
proceeds from the loss payee upon invoices for repair work in progress,
replacement parts which are ordered or for work completed as provided above in
this Section 12(d). Any amount referred to in this Section 12(d) which is
payable to Lessee shall not be paid to Lessee if at the time of such payment
any Default or Event of Default shall have occurred and be continuing, but
shall be held by Lessor as security for the obligations of Lessee under this
Lease or applied as provided in Section 12(e).
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(e) Application in Default. Any amount referred to
in clause (ii) of Section 12(c) or Section 12(d) which is otherwise payable to
Lessee shall not be paid to Lessee, or if it has been previously paid to or
retained by Lessee, shall be paid by Lessee to Indenture Trustee, so long as
the Lien of the Indenture shall not have been discharged, and thereafter to
Lessor, if at the time of such payment or retention a Default or an Event of
Default shall have occurred and be continuing. In such case, all such amounts
shall be paid to and held by Indenture Trustee, so long as the Lien of the
Indenture shall not have been discharged, and thereafter held by Lessor as
security for the obligations of Lessee, or, at the option of Indenture Trustee
or Lessor, applied by Indenture Trustee or Lessor toward payment of any of
Lessee's obligations at the time due hereunder, including, without limitation,
by reason of this Lease being declared or deemed declared in default, as
Indenture Trustee or Lessor may elect. At such time as there shall not be
continuing any such Event of Default or Default, all such amounts at the time
held by Indenture Trustee or Lessor in excess of the amount, if any, which
Indenture Trustee or Lessor has elected for application as provided above,
shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date,
and thereafter on any renewal by the Lessee of the insurance required hereby
(but in no event less than once in every twelve (12) month period), Lessee will
furnish to Lessor and Indenture Trustee a certificate executed and delivered by
an Approved Insurer or the Approved Broker, describing in reasonable detail,
and in accordance with customary practice, insurance carried on the Aircraft
and Lessee shall also furnish an opinion or report by the Approved Insurer or
the Approved Broker certifying that the insurance then maintained on the
Aircraft complies with the terms of this Lease. Lessee will cause the Approved
Broker to agree to advise Lessor, Owner Participant and Indenture Trustee in
writing at least thirty (30) days (seven (7) days or such lesser period of time
as is the insurance industry standard for war/allied perils coverage) prior to
the expiration, non-renewal, termination or cancellation for any reason
(including, without limitation, failure to pay premium therefor) or material
modification of any such insurance.
In the event Lessee shall fail to maintain insurance as
herein provided, Lessor, Owner Participant or Indenture Trustee at their
respective options, may provide such insurance and, in such event, Lessee
shall, upon
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demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease
is in effect, the Permitted Sublessee) may carry primary insurance outside of
the aviation insurance markets in New York, London or Paris if the relevant
primary insurer shall have obtained reinsurance and such reinsurance (i) is on
the same terms as the original insurance and includes the provisions required
by this Agreement; (ii) provides in case of any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or affecting the original
insurer that the reinsurers' liability will be to make such payment as would
have fallen due under the relevant policy of reinsurance if the original
insurer had (immediately before such bankruptcy, insolvency, liquidation,
dissolution or similar proceedings) discharged its obligations in full under
the original insurance policies in respect of which the then relevant policy of
reinsurance has been effected; and (iii) contains a "cut-through" clause in the
following form (or otherwise, satisfactory to Owner Participant): "The
Reinsurers and the Reinsured hereby mutually agree that in the event of any
claim arising under the reinsurances in respect of a total loss or other claim
where as provided by the Amended and Restated Aircraft Lease Agreement [GPA
1989 BN-8] dated as of June __, 1997 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
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insurance to be carried under Section 12(b) above), shall be the same as from
time to time applicable to similar size passenger aircraft that comprise
Lessee's fleet in similar storage or grounding, and in any event (including,
without limitation, at any time when there shall be in existence a Permitted
Sublease), the same as from time to time customarily carried by
similarly-situated, prudent Certificated Air Carriers for passenger aircraft of
similar size as the Aircraft in similar storage or grounding.
(i) Amounts Held. So long as no Default or Event of
Default has occurred and is continuing, any amount held by Lessor or Indenture
Trustee, as the case may be, until application by Lessor or Indenture Trustee,
as the case may be, pursuant to this Section 12 shall be invested as provided
in Section 21(h) hereof.
(j) After the Term. Lessee shall continue to
maintain at its expense the insurance described in Section 12(a) for three
years after the expiration or termination of the Basic Term or Renewal Term, if
Lessee has elected to renew the Lease in accordance with Section 20, covering
each Indemnitee as its interest may appear and specifically insuring the
indemnity contained in Section 13 to the extent of the coverage of such policy.
(k) Governmental Indemnity. In lieu of certain of
the insurance described in Section 12 above, Lessee may provide a United States
governmental indemnity, to the extent and subject to the terms and conditions
specified in Section 6(c).
Section 13. General Indemnity.
Lessee hereby agrees to indemnify, reimburse, defend and
hold harmless each Indemnitee on a net after-tax 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
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or incurred by, any Indemnitee, from (and including) the Restatement Date,
including, without limitation, injury, death or property damage of passengers,
shippers and others, environmental control, noise and pollution regulations,
which in any way may result from, pertain to, or arise in any manner out of, or
are in any manner related to (1) the Operative Documents, the Purchase
Documents or the Financing Documents (exclusive of the Foreign Lease Documents
except as expressly provided herein or as otherwise would be covered by the
occurrences described in the following clause (2)(A)) or any of the
transactions contemplated thereby; (2) the Aircraft, the Airframe, any Engine
or any engine used in connection with the Airframe or any Part thereof,
including, but not limited to, (A) the importation, exportation, condition,
manufacture, design, purchase, ownership, registration, reregistration,
deregistration (other than any deregistration caused by the failure of the
registered owner of the Aircraft to be a "citizen of the United States" as
defined under the Federal Aviation Act and the regulations thereunder or to
file the documentation necessary to continue FAA registration of the Aircraft),
delivery, nondelivery, assignment, leasing, subleasing, sub-subleasing,
acceptance, rejection, possession, repossession, control, return, financing,
Liens (excluding Lessor's Liens, Head Lessor's Liens and Lenders' Liens, but
including the Lien of the Indenture), use, performance, modification,
maintenance, overhaul, operation, pooling, interchange, repair, testing, sale,
return or other disposition or application of the Aircraft, the Airframe, any
Engine, any engine used in connection with the Airframe or any Part (including,
but not limited to, latent and other defects whether or not discoverable by
Lessee or Lessor, Claims related to any actual or alleged violation of Law,
loss or damage to any property of passengers, shippers or otherwise or any
Claim related to patent, copyright, trademark or other infringement) either in
the air or on the ground, and including, without limitation, any interest
therein of an Indemnitee or imposition of a Lien thereon (excluding Lessor's
Liens, Head Lessor's Liens and Lenders' 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
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defect shall be discovered, whether or not such Aircraft, Airframe, Engine,
engine or Part is at the time in the possession of Lessee, and regardless of
where such Aircraft, Airframe, Engine, engine or Part may then be located; or
(3) the breach of any representation, warranty or covenant made by Lessee
hereunder or under any of the other Operative Documents or any Default or Event
of Default; provided, however, that the indemnity provided for in this Section
13 shall not apply to any portion of a Claim of an Indemnitee to the extent it
results from: (i) the gross negligence or willful misconduct of such
Indemnitee or any of its directors, officers, employees, servants or agents
(except any such gross negligence or willful misconduct as may be attributed to
an Indemnitee due to its interest in the Aircraft, the Airframe, an Engine, any
Operative Document, any Purchase Document or any Financing Document), (ii) the
material breach of any express representation, warranty or covenant made by
such Indemnitee herein or in any other Operative Document, or the Financing
Documents (not resulting from a breach by Lessee of any of its representations,
warranties or covenants in the Operative Documents or in the Financing
Documents), (iii) any Taxes, whether or not Lessee is required to indemnify
such Taxes under Section 10 hereof or the Tax Indemnification Agreement (it
being understood that Section 10 hereof and the Tax Indemnification Agreement
exclusively provide for Lessee's liability with respect to Taxes), (iv) any
Claim which relates solely to events which occurred prior to but excluding the
Restatement Date (other than Claims related to the condition, manufacture or
design of the Aircraft) and any Claim concerning payment for or the ownership
of Buyer Furnished Equipment, (v) an underlying act which occurs after the
Aircraft has been returned to Lessor in accordance with the terms hereof and
the Term of this Lease has been terminated or has expired and the return is not
related to an Event of Default, (vi) as to such Indemnitee, an underlying act
which occurs after a disposition or other transfer (voluntary or involuntary)
by such Indemnitee of all or any part of its interest in the Aircraft, the
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
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disposition or (vii) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Financing Documents, the Purchase Documents or the Operative Documents, which
amendments, supplements, waivers or consents were not requested by Lessee or
are not required to give effect to the provisions of the Operative Documents,
the Financing Documents or the Purchase Documents (provided, however, in no
event will Lessee be liable for any Claims resulting from, pertaining to or
arising from or related to Lessor's granting or creating a Lessor's Lien or the
granting or creation of a Head Lessor's Lien). Upon full payment of the
indemnities herein, Lessee shall be subrogated to all rights and remedies which
such Indemnitee may have against any third party against whom such Indemnitee
has the right to assert a Claim which arises under any action described in this
Section 13 (except Claims under such Indemnitee's own insurance policies or
under the indemnification provisions of any of the Financing Documents).
Without limiting Lessee's liability under this Section 13,
Lessee hereby waives and releases any Claim now or hereafter existing against
any Indemnitee, on account of any Claims for or on account of or arising or in
any way connected with injury to or death of personnel of Lessee or loss or
damage to property of Lessee or the loss of use of any property which may
result from or arise in any manner out of or in relation to the importation,
exportation, ownership, purchase, registration, reregistration, deregistration
(except as to Owner Participant or Lessor as and to the extent such Indemnitee
is responsible under the Refunding Agreement for Claims related to such
deregistration), delivery, non-delivery, assignment, leasing, subleasing,
manufacture, acceptance, rejection, possession, return, financing, performance,
modification, maintenance, condition, use, operation, pooling, interchange,
repair, testing, sale, return or other disposition of the Aircraft, the
Airframe, any Engine or any engine used in connection with the Airframe or any
Part thereof, either in the air or on the ground, or which may be caused by any
defect in such Aircraft, Airframe, Engine, 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
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time in the possession of Lessee, and regardless of the location of such
Aircraft at any such time except to the extent that such Claim results from (i)
the gross negligence or willful misconduct of such Indemnitee (except any such
gross negligence or willful misconduct as may be attributed to an Indemnitee
due to its interest in the Aircraft, the Airframe, an Engine, any Operative
Document, any Purchase Document or any Financing Document), (ii) the material
breach of any of its express representations, warranties or covenants
hereunder, under any other Operative Document or Financing Document (not
resulting from a breach by Lessee of any of its representations, warranties or
covenants in the Operative Documents or in the Financing Documents), (iii) any
Taxes, whether or not Lessee is required to indemnify such Taxes under Section
10 hereof or the Tax Indemnification Agreement (it being understood that
Section 10 hereof and the Tax Indemnification Agreement exclusively provide for
Lessee's liability with respect to Taxes), (iv) any Claim which relates solely
to events which occurred prior to but excluding the Restatement Date (other
than Claims related to the condition, manufacture or design of the Aircraft)
and any Claim concerning payment for or the ownership of Buyer Furnished
Equipment, (v) an underlying act which occurs after the Aircraft has been
returned to Lessor in accordance with the terms hereof and the Term of this
Lease has been terminated or has expired and the return is not related to an
Event of Default, (vi) an underlying act which occurs after a disposition or
other transfer (voluntary or involuntary) by such Indemnitee of all or any part
of its interest in the Aircraft, the Airframe, any Engine, or any Part, or in
the Financing Documents, the Purchase Documents or the Operative Documents
(except as contemplated under or pursuant to the Operative Documents, the
Financing Documents or the Purchase Documents and except as resulting from the
exercise of its remedies during the period while an Event of Default has
occurred and is continuing and prior to the time such Indemnitee has received
payment of all amounts owing to it hereunder and except any Claim which is
alleged or does relate to the period prior to such disposition), (vii) the
authorization or giving or withholding of any future amendments, supplements,
waivers or consents with respect to any of the Financing Documents, the
Purchase Documents or the Operative 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.
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Each Indemnitee shall, at Lessee's sole cost and expense
and with Lessee's cooperation, be entitled to conduct the defense of any Claim
against it; provided, however, that Lessee shall, at the request of any
Indemnitee and so long as no Event of Default has occurred and is continuing,
assume and conduct promptly and diligently, at its sole cost and expense, the
defense of such Indemnitee against any Claim of a third party with counsel
reasonably acceptable to such Indemnitee; and provided, further, however, that
Lessee shall have the right as well as the obligation to assume such defense to
the extent required under the terms of the applicable insurance policies so
long as no Default or Event of Default has occurred and is continuing. In the
event Lessee shall so assume the defense of any Claim, such Indemnitee shall
cooperate with Lessee in defending such Claim, but any expenses incurred by
such Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall
enter into a settlement or other compromise with respect to any Claim which
Lessee or such Indemnitee is defending hereunder in excess of $100,000 without
the prior written consent of the other, which consent shall not be unreasonably
withheld.
Each Indemnitee agrees to give Lessee prompt notice of any
Claims by a third party hereunder following such Indemnitee's actual knowledge
of such Claims by third parties, but the failure of such Indemnitee to give the
notice required by this Section 13 shall not constitute a release by Lessor or
such Indemnitee of, or reduce, any of the obligations or liabilities of Lessee
to such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense
thereof where Lessee has the right to control the defense thereof is materially
prejudiced as a result solely of such failure of such Indemnitee to give such
notice.
An Indemnitee or Lessee shall supply the other with such
information requested by the other as is reasonably necessary or advisable for
the other to control the defense of a Claim to the extent permitted by this
Section.
Nothing in this Section shall be construed as a guaranty
by Lessee of payments due pursuant to any indebtedness incurred with respect to
the purchase of the Aircraft or of the residual value of the Aircraft.
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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, Foreign Lessor 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 and Liens arising out of the Foreign Lease 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 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, 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 Part, or any interest
of Lessor, Foreign 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
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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, 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, Lease Supplement, Indenture Supplement and
Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
Lease Supplement, Indenture Supplement, Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor, 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, 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
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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 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 or
as applicable, Foreign Lessor, the Lien of the Indenture, this Lease, and the
interests of Lessor, Foreign 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 lessee may operate the Aircraft, as Lessor may reasonably
request. Lessee shall also do or cause to be done, at its own expense (except
it shall be at Lessor's expense if in connection with a change in the ownership
of the Aircraft or any other transfer or assignment by Lessor other than as
contemplated hereunder or under the Financing Documents or in connection with
an Event of Default), any and all acts and things which may be required under
the terms of any other Law involving any jurisdiction in which Lessee, any
Permitted Sublessee or any wet lessee may operate the Aircraft, which Lessor
may reasonably request, to protect and preserve the title of the Lessor or as
applicable, Foreign 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
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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 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 Agreement 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, or such other location as Lessor and Lessee may agree,
fully equipped with all required Engines, or other engines owned by Lessee
(which shall thereupon become Engines as hereinafter provided) meeting the
conditions specified in this Section and Exhibit E, duly installed thereon by
delivering the same to the Lessor at such location. Lessee shall comply with
Section 11(b) and this Section 16 with respect to any engines installed on the
Aircraft returned to Lessor hereunder and meeting the conditions described
herein which were not originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion
hereunder, the Aircraft shall be: (i) free and clear of all Liens, except for
the Lien of the Indenture, Head Lessor's Liens, Lessor's Liens, 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
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Federal Aviation Act (whether by means of a voting trust agreement or
otherwise) in which case the Aircraft shall nevertheless meet all conditions
for such certification and for the issuance of such certificate; (iii) in full
airworthy condition for over water and EROPS operation according to the FAA
standards required to allow the Aircraft to be operated under, and in full
compliance with, such Airworthiness Certificate and Part 121 of the regulations
promulgated under the Federal Aviation Act for such operation, such compliance
to be by means of such mechanical repairs or modifications or such inspections
as may be required thereby, but not by operational restrictions, by logbook
entries or other method of acceptance of such restrictions; (iv) in full
compliance with Lessee's Maintenance Program; (v) to the extent the owner of
the Aircraft is a "citizen of the United States" within the meaning of Section
40102(a)(15) of the Federal Aviation Act and reasonably cooperative with Lessee
at Lessee's expense with respect to effecting such registration, duly
registered in the name of the Lessor or other then owner of the Aircraft under
the Federal Aviation Act; (vi) in full compliance with the maintenance and
operation provisions of this Lease and all FAA airworthiness directives,
mandatory service bulletins and equivalent requirements which by their terms
require compliance on or before the last day of the Term (without regard to any
deferral, waiver, deviation or exemption granted by the FAA specifically to
Lessee delaying such compliance); (vii) in good and airworthy operating
condition, and in the same condition (including, without limitation, in a
passenger configuration suitable for passenger revenue service) as when
delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or
outstanding deferred maintenance items, scheduled or unscheduled, with all
systems and components fully serviceable and operational and with no placards
restricting operation or use, and (viii) with all remaining warranties,
indemnities, policies and guarantees referred to in Section 5(d) made available
to Lessor in a manner and by documents in form and substance reasonably
satisfactory to Lessor.
(c) Engines. In the event any engine not owned by
Lessor shall be installed on the Aircraft on any Return Occasion, without
limiting Lessee's obligations under the 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
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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 Liens arising out of the Foreign Lease Agreement.
(d) Records and Documents. Upon the return of the
Aircraft, Lessee shall deliver to Lessor (i) all logs, manuals and data, and
inspection, modification, overhaul and other records, related to the Aircraft,
including, without limitation, those required to be maintained with respect
thereto under applicable rules and regulations of the FAA, together with a
detailed description of the Maintenance Program then applied to the Aircraft
and shall provide Lessor and its designees access to the Maintenance Program
which is sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft
under the Maintenance Program, in each case as Lessor may reasonably request,
and all documentation with respect to the Aircraft set forth on Exhibit B or
otherwise delivered to Lessee at delivery thereof, and (ii) all records
necessary or required by the FAA to certify and place the Aircraft on an FAA or
other country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed
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property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the maintenance records by part numbers and serial
numbers other than the manufacturer's shall be provided with interchange or
cross reference listing necessary to establish complete traceability. All
documentation, flight, and maintenance records as specified by United States
Federal Aviation Regulations 91.173, 91.174, and each paragraph of regulation
121.380 which normally accompany the transfer of an aircraft which has been
operating in regulated commercial air service, shall be delivered to Lessor
with the Aircraft. Any documents or records required to be delivered hereunder
shall be in English.
(e) Condition of Aircraft. Upon any Return Occasion,
Lessee shall return such Aircraft to Lessor in such condition that the Aircraft
shall also comply with each and every condition and requirement set forth
elsewhere in this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion,
Lessee shall make the Aircraft available to Lessor at the location where the
"block 'C' Check" (or equivalent level designated check or checks) required
hereunder to be performed immediately prior to redelivery is to be performed
for detailed inspection of the documents referred to in paragraph (d) above and
the Airframe, Engines and Parts structure and parts, at Lessee's expense
(excluding 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
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Final Inspection shall be combined with such "block 'C' Check" (or equivalent
level check or checks) and may include such other items as reasonably requested
by Lessor. Lessee shall give Lessor not less than thirty (30) days prior
written notice of the commencement date of such Final Inspection. The period
allowed for the Final Inspection shall be the same period during which such
"block 'C' Check" is being performed and shall have such duration as to permit
the opening of any areas of the Aircraft which are necessary or advisable to
satisfy Lessor as to compliance with the requirements of this Section 16 and
Exhibit E. The Final Inspection shall commence on the date so noticed which
shall be on or before the expiration of the Term with respect to the Aircraft
and shall continue on consecutive days until all activity required above to be
conducted has been concluded. To the extent that any portion of the Final
Inspection extends beyond the expiration of the Term, unless Lessor has
terminated the Lease pursuant to Section 18(g) hereof, the Term with respect to
the Aircraft undergoing the Final Inspection shall be deemed to have been
automatically extended, and all obligations hereunder continued, on a daily
basis until the Final Inspection shall have been concluded and Lessee shall pay
Rent during any such extension in an amount equal to the average daily Basic
Rent or Renewal Rent, as the case may be, paid in respect of the last year of
the Basic Term or Renewal Term, as the case may be (and Stipulated Loss Value
during such extension shall equal the Stipulated Loss Value on the last day of
the Basic Term or Renewal Term, as the case may be); provided, however, that
Lessee shall not be required to pay Rent with respect to the Aircraft during
the period of extension to the extent that Lessor is responsible for the delay
in completion of the Final Inspection. All storage expenses attributable to
any Term extension pursuant to the preceding sentence shall be payable by
Lessee, except that Lessee shall not be liable for any storage expenses which
are incurred after the sixtieth (60th) day after the Term to the extent that
storage continues thereafter due to Lessor's delay in completion of the Final
Inspection.
(g) Aircraft Records and Documents. In order to
enable Lessor to prepare for the Final Inspection of the Aircraft pursuant to
Subsection 16(f) above, Lessee agrees to make available to Lessor at a
maintenance base of Lessee with adequate facilities for short-term maintenance,
where 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
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limitation, original airworthiness directive compliance documents and other
work documents) regarding the condition, use, maintenance, or operation as
Lessor may reasonably request or require to substantiate the status of the
Aircraft.
(h) Corrections and Subsequent Corrections. To the
extent that the Aircraft or any Engine fails upon a Return Occasion to conform
to any requirement imposed by this Lease, Lessor may, at its option, (i)
continue the Lease in effect in the manner provided for in Section 16(f) above
with regard to automatic extension until such time as such Aircraft is brought
up to the condition required by this Section 16, including Exhibit E, or (ii)
accept the return of such Aircraft and thereafter have any such nonconformance
corrected, at such time as Lessor may deem appropriate but not to commence
later than ninety (90) days following the return of such Aircraft, at
commercial rates then charged by the Person selected by Lessor to perform such
correction. Lessee's obligations to pay such Supplemental Rent shall survive
the Expiration Date or other termination of this Lease. Nothing set forth in
this paragraph shall constitute a limitation on Lessor's or Owner Participant's
ability to recover from Lessee any damages, expenses or losses pursuant to
Sections 13 or 18 hereof suffered as a result of Lessee's failure to effect the
return of the Aircraft at the time, in the place and in the condition as
specified in this Section 16 and Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to
the expiration of the Term, Lessor will be permitted to conduct a
non-commercial functional flight check flight of no more than two (2) hours
duration in accordance with the Manufacturer's functional flight check
procedures at Lessee's expense to demonstrate the airworthiness of the Aircraft
and proper functioning of all systems and components. A qualified pilot and up
to five (5) other representatives selected by Lessor may take part in such
flight to verify compliance of the Aircraft with the requirements of this
Lease, provided, that Lessor shall be responsible for the charges of such
qualified pilot and representatives. Lessee may combine the functional flight
check provided in this Section 16(i) with the delivery flight specified in
Section 16(a) and such functional flight check shall include the landing. Any
discrepancy or malfunction detected during any functional flight check
(including a functional flight check combined with a delivery flight) shall be
corrected, at Lessee's expense,
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and prior to the expiration of the Term. To the extent that any actions to
correct any such discrepancy or malfunction extend beyond the Term, the
provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee
shall, at Lessee's expense, take such action as Lessor may reasonably request
to assist Lessor in obtaining any required documents in relation to the export
of the Aircraft from the United States (including, without limitation, a valid
and subsisting export certificate of airworthiness with respect to the Aircraft
and export license) and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee
shall deliver to Lessor, at no cost to Lessor, all service bulletin kits
furnished without charge by the manufacturer for installation on the Aircraft
which have not been so installed together with appropriate instructions for
installation. In the event such uninstalled kits were purchased or
manufactured by Lessee, then Lessor shall be advised of such kits by Lessee and
have a right of first refusal to purchase such kits at Lessee's cost for a
period of ninety (90) days after return.
(l) Storage Upon Return. Upon any Return Occasion,
Lessee shall, at Lessor's request and at Lessee's risk and expense, in addition
to other storage referred to above, arrange for the parking, storage and
insurance of the Aircraft for a period not exceeding sixty (60) days at such
reasonable location as Lessor requests where Lessee has or can arrange for
storage. Lessee shall pay or cause to be paid all costs and expenses for such
parking, storage and insurance.
(m) Resale/Release Cooperation. During the last
twelve (12) months of the Term, with reasonable notice and at reasonable times,
Lessee will cooperate, and cause any Permitted Sublessee to cooperate, in all
reasonable respects, with the efforts of Lessor to sell or lease the Aircraft
after the end of the Term, by permitting prospective purchasers or lessees,
except to the extent prohibited by applicable Law, to inspect the Aircraft and
the records relating thereto to the extent it does not unreasonably interfere
with the operation or maintenance of the Aircraft or the conduct of Lessee's
business.
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Section 17. Events of Default.
Any one or more of the following occurrences or events
shall constitute an Event of Default (whether any such event shall be voluntary
or involuntary or come about or be effected by operation of Law or pursuant to
or in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of
Basic Rent, Renewal Rent or Stipulated Loss Value to Lessor within three (3)
Business Days after the date on which such payment is due, or (ii) any other
payment of Supplemental Rent due hereunder within ten Business Days after the
date on which such payment is due and Lessee has received written demand
therefor by the party entitled thereto; provided that any failure of Lessee to
pay to Lessor or the Owner Participant when due any Excepted Payments (as
defined in the Indenture) shall not constitute an Event of Default unless
Lessor or Owner Participant delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full
force and effect any insurance required under the provisions of Section 12
hereof or shall operate the Aircraft outside of the scope or in violation of
the terms of the insurance or United States Government indemnity coverage
required to be maintained with respect to such Aircraft; or
(c) Any representation or warranty made by Lessee
herein or in the Refunding Agreement or in any certificate furnished by Lessee
in connection herewith or therewith is or was incorrect at the time made in any
material respect and such incorrectness shall not have been cured within thirty
(30) days after the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any
covenant, condition, or agreement to be performed or observed by it pursuant to
this Lease or the Refunding Agreement, and such failure shall continue uncured
for thirty (30) days after written notice thereof is given by Lessor or
Indenture Trustee to Lessee; provided, however, 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
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Section 6 relate to maintenance, service, repair or overhaul, or Section 9, and
notwithstanding the diligence of Lessee in attempting to cure such failure,
such failure is not cured within said thirty (30) day period but is curable
with future due diligence, there shall exist no Event of Default under this
Section 17 so long as Lessee is proceeding with due diligence to cure such
failure and such failure is remedied not later than one hundred eighty (180)
days after receipt by Lessee of such written notice; or
(e) Lessee consents to the appointment of a
custodian, receiver, trustee or liquidator of itself or all or any material
part of Lessee's property or Lessee's consolidated property, or Lessee admits
in writing its inability to, or is unable to, or does not, pay its debts
generally as they come due, or makes a general assignment for the benefit of
creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary
petition seeking reorganization in a proceeding under any bankruptcy or
insolvency Laws (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against Lessee in any such proceeding,
or Lessee by voluntary petition, answer or consent seeks relief under the
provisions of any other bankruptcy, insolvency or other similar Law providing
for the reorganization or winding-up of corporations, or provides for an
agreement, composition, extension or adjustment with its creditors, or any
corporate action (including, without limitation, any board of directors or
shareholder action) is taken by Lessee in furtherance of any of the foregoing,
whether or not the same is fully effected or accomplished; or
(f) An order, judgment or decree is entered by any
court appointing, without the consent of Lessee, a custodian, receiver, trustee
or liquidator of Lessee, or of all or any material part of Lessee's property,
or Lessee's consolidated property, or all or any material part of Lessee's
property or Lessee's consolidated property is sequestered, and any such order,
judgment or decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of ninety (90) days after the
date of entry thereof or at any time an order for relief is granted; or
(g) An involuntary petition against Lessee in a
proceeding under the Federal bankruptcy laws or other insolvency Laws (as now
or hereafter in effect) is filed and is not withdrawn or dismissed within
ninety (90) days thereafter or at any time an order for relief is granted in
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such proceeding, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to Lessee, any
court of competent jurisdiction assumes jurisdiction over, or custody or
control of, Lessee or of all or any material part of Lessee's property, or
Lessee's consolidated property and such jurisdiction, custody or control
remains in effect, unrelinquished, unstayed or unterminated for a period of
ninety (90) days or at any time an order for relief is granted in such
proceeding; or
(h) Lessee's cessation of business as a commercial
passenger Certificated Air Carrier or, except in either case in connection with
a labor dispute, announcement thereof or Lessee's suspension of its business as
a commercial passenger Certificated Air Carrier, or for any reason the
preponderant business activity of Lessee shall cease to be that of a commercial
passenger Certificated Air Carrier; or
(i) Lessee's loss or suspension of its United States
air carrier license or certificate under Part 121 of the Federal Aviation
Regulations or certificate under Section 41102(a) of the Federal Aviation Act.
Section 18. Remedies.
Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, Lessor may, at its
option, declare by written notice to Lessee this Lease to be in default,
provided, however, that this Lease shall be deemed to be declared in default
automatically without the necessity of such written declaration upon the
occurrence of any Event of Default described in paragraph (e), (f) or (g) of
Section 17 hereof; and at any time thereafter, so long as any outstanding Event
of Default shall not have been remedied, Lessor may do one or more of the
following with respect to all or any part of the Airframe and any or all of the
Engines as Lessor in its sole discretion shall elect, to the extent permitted
by, and subject to compliance with any mandatory requirements of, applicable
Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the
written demand of Lessor and at Lessee's cost and expense, immediately return,
and the Lessee hereby agrees that it shall return promptly all or such part of,
the Aircraft to Lessor in the manner specified in such notice, in which event
such return shall not be delayed for the purposes of
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complying with the return conditions specified in Section 16 and Exhibit E
hereof (none of which conditions shall be deemed to affect Lessor's possession
of the Aircraft) or delayed for any other reason; provided, however, that
Lessee shall remain and be liable to Lessor for amounts provided for herein or
other damages resulting from the Aircraft or any Engine not being in the
condition required by Section 16 and Exhibit E. Notwithstanding the foregoing,
at Lessor's option, Lessee shall be required thereafter to take such actions as
would be required by the provisions of this Lease if such Aircraft were being
returned at the end of the Term hereof with respect to such Aircraft. In
addition, Lessor or Lessor's agent, at its option and to the extent permitted
by applicable Law, may but shall not be obligated to enter upon the premises
where all or any part of the Aircraft, Airframe and/or Engines are located to
take immediate possession of and, at Lessor's option, remove the same (and/or
any engine which is not an Engine but which is installed on the Airframe,
subject to the rights of the owner, lessor or secured party thereof) by summary
proceedings or otherwise, all without liability accruing to Lessor or Lessor's
agent for or by reason of such entry or taking of possession or removal whether
for the restoration of damage to property, or otherwise, caused by such entry
or taking, except direct damages to the extent caused by Lessor's gross
negligence or willful misconduct.
(b) With or without taking possession thereof, sell
or cause to be sold, the Aircraft, Airframe or Engine or any part thereof, or
Lessor's interest therein, at private or public sale, as Lessor in its sole
discretion may determine, or otherwise dispose of, hold, use, operate, or lease
to others, or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole
discretion may determine, all free and clear of any rights of Lessee or any
Permitted Sublessee and except as hereinafter set forth in this Section 18.
Lessor may be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above, Lessor, by written notice to Lessee specifying a payment
date which shall be a Stipulated Loss Value Date, may demand that Lessee pay to
Lessor, and Lessee shall pay to Lessor, on the Stipulated Loss Value Date
specified in such notice, as liquidated damages for loss of bargain and not as
a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due
for the period commencing after the Stipulated Loss Value Date specified for
payment in such notice), any unpaid
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Rent for the Aircraft to and including the Stipulated Loss Value Date specified
in such notice, plus whichever of the following amounts as Lessor may specify,
in its sole and absolute discretion, in such notice: (i) an amount equal to
the excess, if any, of the sum of the Stipulated Loss Value for the Aircraft,
Airframe or Engine computed as of the date specified in such notice plus, if
such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an
amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such
date, over the fair market sale value of the Aircraft, Airframe or Engine as of
the date specified in such notice or (ii) an amount equal to the excess, if
any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or
Engine computed as of the date specified in such notice plus, if such date is a
Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the
Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair
market rental value of the Aircraft for the remainder of the Term as of the
date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b)
above, shall have sold the Aircraft, Airframe or Engine or its interest
therein, Lessor, in lieu of exercising its rights under paragraph (c) above,
may, if it shall so elect, demand that Lessee pay Lessor, and Lessee shall pay
to Lessor on such demand, as liquidated damages for loss of bargain and not as
a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may be, due
for the period commencing after the Stipulated Loss Value Date immediately
prior to the date such sale occurs), any unpaid Rent due to and including the
date of sale, plus the amount by which the Stipulated Loss Value of such
Aircraft, Airframe or Engine, computed as of such Stipulated Loss Value Date,
exceeds the net proceeds of such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph
(b), (c) or (d) above, by notice to Lessee, Lessor may require Lessee to pay,
on the next Stipulated Loss Value Date, to Lessor, and Lessee hereby agrees
that it will so pay to Lessor, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the Basic Rent or Renewal Rent, as the case may
be, payable in advance for the period on and after the Stipulated Loss Value
Date), any unpaid Basic Rent or Renewal Rent, as the case may be, for such
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
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Stipulated Loss Value for the Aircraft computed as of such Stipulated Loss
Value Date; and upon such payment of liquidated damages and the payment of all
other Rent then due hereunder and the discharge of the Lien of the Indenture
pursuant to Section 10.01 thereof, Lessor shall, at Lessee's expense, transfer,
without recourse or warranty (except as to the absence of Lessor's Liens and
the Lien of the Indenture), all right, title and interest of Lessor in and to
the Aircraft to Lessee or as it may direct and Lessor shall, at Lessee's
expense, execute and deliver such documents evidencing such transfer and take
such further action as Lessee shall reasonably request.
(f) In the event that Lessor, pursuant to paragraph
(b) above, shall have relet the Aircraft, Airframe or Engine under a long term
lease, Lessor, in lieu of exercising its rights under paragraph (c) above with
respect to such Aircraft, Airframe or Engine, may, if it shall so elect, demand
that Lessee pay Lessor, and Lessee shall pay Lessor on such demand, as
liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, for such Aircraft due after the
time of reletting) any unpaid Rent for such Aircraft due up to the date of
reletting, plus the amount, if any, by which the aggregate Basic Rent or
Renewal Rent, as the case may be, for such Aircraft which would otherwise have
become due over the Basic Term or Renewal Term, as the case may be, discounted
periodically (equal to installment frequency) to present worth as of the date
of reletting at the rate of 8.50% per annum, exceeds the aggregate basic rental
payments to become due under the reletting from the date of such reletting to
the date upon which the Term for such Aircraft, Airframe or Engine would have
expired but for Lessee's default, discounted periodically (equal to installment
frequency) to present worth as of the date of the reletting at the rate of
8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by
written notice to Lessee which cancellation, rescission and/or termination
shall be effective upon dispatch, whereupon Lessee's right to possess and use
the Aircraft, Airframe or Engine shall immediately cease, however, Lessee shall
be and remain liable for damages and losses suffered by Lessor and all other
amounts payable by Lessee hereunder.
(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
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Lessor may have hereunder, under the other Operative Documents, at law or in
equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable
(without duplication of the remedies above and of Lessee's obligations under
Section 10 and Section 13 hereof and subject to the exclusions set forth
therein) for any and all unpaid Rent before, during or after the exercise of
any of the above mentioned remedies (including without limitation interest on
unpaid amounts with respect to all amounts not paid when due, including,
without limitation, any amounts payable pursuant to the foregoing provisions of
this Section 18), and, except as specified above, until satisfaction of all of
Lessee's obligations to Lessor hereunder and for all legal fees and other costs
and expenses incurred by any Indemnitee by reason of the occurrence of any
Event of Default or the exercise of an Indemnitee's remedies with respect
thereto, including all costs and expenses incurred in connection with the
return of the Aircraft in accordance with the terms of Section 16 and Exhibit E
hereof or in placing the Aircraft, Airframe or Engine in the condition and with
airworthiness certification as required by such Section and such Exhibit and
costs and expenses related to the Lease, the Refunding Agreement, the
Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or
each Liquidity Facility. All liquidated damages payable pursuant to the
foregoing shall bear interest, which shall be payable on the date the payment
of such liquidated damages is due at a rate equal to the Interest Rate from and
including the date due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives
and agents, to the extent permitted by applicable Law, (i) shall have the right
to enter upon any premises where it reasonably believes the Aircraft, the
Airframe, an Engine or Part to be located, (ii) shall not be liable, in
conversion or otherwise, for the taking of any personal property of Lessee
which is in or attached to the Aircraft, the Airframe, an Engine or Part which
is repossessed, (iii) shall not be liable or responsible, in any manner, for
any damage or injury to any of Lessee's 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
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of the Aircraft, the Airframe, an Engine or Part on any premises owned by
Lessee or under Lessee's control.
If requested by Lessor, Lessee shall, at its sole expense,
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing,
preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the
Airframe, an Engine or Part to the condition required by Section 16 and Exhibit
E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for
sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an
Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine
or Part. Lessor is hereby authorized and instructed, at its option, to make
expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair market
rental value" or the "fair market sales value" of the Aircraft, Airframe, an
Engine or Part shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or
Part pursuant to this Section, Owner Participant may bid for and purchase such
property and Lessee agrees that the amounts paid therefor shall be used in the
computations contemplated herein and Lessee shall remain liable for any
deficiency.
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
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or beginning of exercise by Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No waiver by Lessor of any Event of Default shall in any way
be, or be construed to be, a waiver of the same Event of Default in the future
or any other prior or future Event of Default. To the extent permitted by Law,
Lessee hereby waives any right it may have to require Lessor to mitigate
damages in connection with the remedies described in Sections 18(c), (d), (e)
or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's
attorney-in-fact (which appointment is coupled with an interest) to execute all
documents deemed necessary to release, terminate and void Lessee's interest in
the Aircraft leased hereunder or otherwise to more effectively carry out
Lessor's rights and remedies and to file said documents for recordation with
the FAA, under the Uniform Commercial Code, and with any other appropriate
Governmental Entity, and otherwise act in Lessee's name and place with respect
to the Aircraft, provided that an Event of Default has occurred and is
continuing and this Lease has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full
force and effect and survive the expiration or other termination of this Lease
and are expressly made for the benefit of and shall be enforceable by Lessor,
Owner Participant and, if the Lien of the Indenture has not been discharged,
Indenture Trustee.
Section 19. Security for Obligations.
In order to secure the Equipment Notes, Lessor has
created, by the Indenture, a security interest in the Trust Indenture Estate,
including, without limitation, this Lease and all Rent and other sums payable
hereunder, except as provided in the Indenture and subject in each case to
Liens permitted hereunder. The Indenture provides, among other things for the
assignment by Lessor to Indenture Trustee of its right, title and interest in,
to and under this Lease, to the extent set forth in the Indenture, for the
creation of a first-mortgage lien on and perfected security interest in all of
Lessor's right, title and interest in and to the Aircraft in favor of Indenture
Trustee. Lessee hereby 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
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requirement or the absence of any requirement for any consent under any other
circumstances. Until the Lien of the Indenture has been discharged, Lessee
will furnish to Indenture Trustee counterparts of all notices and other
writings of any kind required to be delivered hereunder by Lessee to Lessor.
Until the Lien of the Indenture has been discharged, (a) Lessee shall make all
payments of Rent, Stipulated Loss Value and all other amounts payable hereunder
(other than Excepted Payments) to or as directed by Indenture Trustee as
provided in Sections 4(c) and 4(d), and (b) Indenture Trustee shall be entitled
to exercise the rights of Lessor (but not Owner Participant) (other than
Expected Rights) herein as and to the extent provided herein or in the
Indenture and any express reference to Indenture Trustee in any Section of this
Lease shall not give rise to any implication that Indenture Trustee may not
exercise the rights of Lessor in any other Section of this Lease as and to the
extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement
which require or permit action by, the payment of monies to, the consent or
approval of, the furnishing of any instrument or information to, or the
performance of any other obligation to, Indenture Trustee, shall not be
effective, and the Sections hereof containing such provisions shall be read as
though there were no such requirements or provisions and all moneys otherwise
payable to Indenture Trustee hereunder shall be paid to Lessor, after Lessee
shall have received from Indenture Trustee notice of discharge of the Lien of
the Indenture.
Any payment or performance by Lessee to or as directed by
Indenture Trustee shall constitute payment or performance of such obligation to
Lessor by Lessee under this Lease.
Any payment or performance of an obligation of Lessee
under this Lease by a Permitted Sublessee shall constitute payment or
performance of such obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease
as provided in the following clause (i) and subject to the following clause
(ii):
(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
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irrevocable notice hereinafter referred to in this clause (i) or
at the time of the commencement of the Renewal Term, Lessee, at
its option, may renew this Lease for one Renewal Term consisting
of a period equal to five years. The right to renew this Lease
for such Renewal Term pursuant to this clause (i) shall be
exercised upon irrevocable notice from Lessee received by Lessor
of Lessee's election to so renew this Lease not less than twelve
(12) months and not more than twenty-four (24) months prior to the
last day of the Basic Term. The Renewal Rent for the Renewal Term
shall be the "fair market rental value" of the Aircraft for such
Renewal Term (the "renewal fair market rental value") as
determined in accordance with the Appraisal Procedure. For
purposes of this paragraph (i), the Appraisal Procedure shall be
initiated by Lessee no earlier than nine (9) months prior to the
end of the Basic Term. If Lessee shall fail to exercise its
option to extend the term of this Lease for the Renewal Term in
accordance with the provisions of this paragraph, all of Lessee's
rights to extend the Term for such Renewal Term shall expire.
Lessee shall pay all reasonable costs and expenses, including,
without limitation, reasonable legal fees and expenses, incurred
by Lessor, Owner Participant and the Indenture Trustee in
connection with the exercise of such option.
(ii) Provisions Applicable During Renewal
Term. All provisions of this Lease, including, without
limitation, as to Rent and Stipulated Loss Value (which shall be,
with appropriate adjustments, in no event less than the greater of
120% of the "fair market sales value" of the Aircraft as of the
first day of the Renewal Term as determined pursuant to the
Appraisal Procedure or the amount set forth on Exhibit A as of the
end of the Basic Term), shall remain in effect and be applicable
during such Renewal Term, except that Lessee shall pay to the
Lessor, semi-annually in arrears as Renewal Rent on each Renewal
Rent Payment Date, the amount for such Renewal Term as determined
in accordance with clause (i) of this Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any
provision of this Lease which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
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remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by Law, each of Lessor and
Lessee hereby waives any provision of Law which renders any provision hereof
prohibited or unenforceable in any respect. No term or provision of this Lease
may be changed, waived, discharged, or terminated orally, but only by an
instrument in writing expressed to be a supplement or amendment to, or waiver
or termination of this Lease signed by an officer of the party against which
the enforcement of the change, waiver, discharge, or termination is sought.
This Lease shall constitute an agreement of lease, and nothing herein shall be
construed as conveying to Lessee any right, title, or interest in the Aircraft
or any Engine or Part except as a lessee only. Without limiting the foregoing,
the parties hereto agree to treat this Agreement as a lease for United States
federal income tax purposes and Lessee will not file a tax return which is
inconsistent with the foregoing and nothing contained herein shall be construed
as an election by Lessor to treat Lessee as having acquired the Aircraft for
the purpose of the investment credit allowed by Section 38 of the 1954 Code or
any similar or successor statute. The headings in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE
WITHOUT REGARD TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between
Lessor and Lessee required or permitted under the terms and provisions hereof
shall be in writing and shall be sent to Lessor or Lessee at their respective
addresses set forth in Exhibit C hereto (or such other addresses as the parties
may designate from time to time in writing). All notices, reports or other
documents provided to Lessor or Lessee shall be provided concurrently to
Indenture Trustee (until such time as the Lien of the Indenture is discharged)
and to Owner Participant, at such address as Owner Participant and Indenture
Trustee, respectively, may designate from time to time. All notices and
instructions hereunder shall become effective when received.
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(d) Lessor's Right to Perform for Lessee. If Lessee
fails to make any payment of Rent required to be made by it hereunder or fails
to perform or comply with any covenant, agreement, or obligation contained
herein, Lessor shall have the right but not the obligation to make such payment
or conform or comply with such agreement, covenant, or obligation, and the
amount of such payment and the amount of the reasonable expenses of Lessor
incurred in connection with such payment or the performance thereof or
compliance therewith, together with interest thereon at the Interest Rate,
shall be payable by Lessee to Lessor (as Supplemental Rent) upon demand. The
taking of any such action by Lessor pursuant to this Section 21(d) shall not
constitute a waiver or release of any obligation of Lessee under this Lease,
nor a waiver of any Event of Default which may arise out of Lessee's
nonperformance of such obligation, nor an election or waiver by Lessor or any
remedy or right available to Lessor under or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this
Lease constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the original counterpart, which shall be identified as
the counterpart containing the receipt therefor executed by or on behalf of
Indenture Trustee on the signature page thereof. Subject to the preceding
sentence, this Lease may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long
as no Event of Default shall have occurred and be continuing and this Lease has
not been declared or deemed to be in default, Lessor shall not take or cause to
be taken any action to interfere with the right of Lessee to the possession,
use, operation and quiet enjoyment of and other rights with respect to the
Aircraft hereunder, and all rents, revenues, profits and income therefrom, in
accordance with the terms of this Lease without interference from Lessor or any
Person lawfully claiming by or through it, provided that Lessor and Owner
Participant shall not be liable for any such interference by Indenture Trustee,
Pass Through Trustee, Note Holder or any other Person lawfully claiming by or
through them, and provided further, that the foregoing shall not be deemed to
have modified the
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obligations of Lessee pursuant to Section 4(d) hereof, which obligations remain
absolute and unconditional.
(g) Brokers. Lessee and Lessor agree that, except as
provided in the Refunding Agreement, there has been no third party as agent
involved in this Lease and each indemnifies the other from liability for fees,
commissions, or other claims made upon the other due to any such claim.
(h) Investment of Funds. Any monies which are held
by Lessor or Indenture Trustee and are payable to Lessee shall, unless a
Default or an Event of Default shall have occurred and be continuing, be
invested as provided below until paid to Lessee or applied by Lessor or
Indenture Trustee to the extent provided herein. Until paid to Lessee or
applied as provided herein or in the Indenture such monies shall be invested by
Lessor or Indenture Trustee from time to time at the expense of Lessee in
Specified Investments, as directed by Lessee in accordance with the provisions
of Section 3.07 of the Indenture if the Lien of the Indenture shall not have
been discharged and thereafter as provided below. There shall be promptly (but
not more frequently than monthly) remitted to Lessee any gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other reasonable expenses, if any, incurred in connection
with such investment) unless a Default or an Event of Default shall have
occurred and be continuing. Lessee will promptly pay to Lessor or Indenture
Trustee, as the case may be, and hold Lessor or Indenture Trustee harmless
from, on demand, the amount of any loss realized as the result of any such
investment (together with any Taxes, fees, commission and other reasonable
expenses, if any, incurred in connection with such investment).
(i) Entire Agreement; Amendment. This Lease
(including the Exhibits hereto), any related letter agreements and the other
Operative Documents, the Financing Documents and the Purchase Documents
(including the Exhibits thereto) and all closing documents delivered in
connection with any of the foregoing embody the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof. This Lease may be changed, waived, discharged, amended, revised or
terminated only by an instrument in writing signed by the party against which
enforcement is sought.
(j) Expenses. Without limiting Section 13 or 18,
Lessee agrees within fifteen (15) days after demand to pay
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or reimburse Lessor for all reasonable out-of-pocket costs and expenses
(including, without limitation, legal and other professional fees and expenses)
incurred or payable by Lessor in connection with or related to (i) the fees and
expenses of Owner Trustee and Indenture Trustee, (ii) to the extent requested
by or relating to acts or omissions of Lessee or as otherwise provided herein
or to give effect to the provisions hereof, or the other Operative Documents,
the Financing Documents or the Purchase Documents, any future amendments,
supplements or other modifications hereof or thereof, or waivers or consents
hereunder or thereunder, and (iii) any Default or Event of Default or the
enforcement of any of Lessor's rights, remedies or privileges hereunder or at
law or in equity, but not Lessor's legal fees and expenses in connection with
the negotiation and execution of this Lease or the Financing Documents.
(k) Federal Bankruptcy Code. In the event Section
1110 of Title 11 of the United States Code is amended, or if it is repealed and
another statute is enacted in lieu thereof, Lessor and Lessee agree to amend
this Lease and take such other action not inconsistent with this Lease as
Lessor reasonably deems necessary so as to afford to Lessor the rights and
benefits as such amended or substituted statute confers upon owners and lessors
of aircraft similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request,
Lessor shall use its best efforts to have the Aircraft registered under the
United States Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process;
Waiver of Forum Non Conveniens; Waiver of Jury Trial. Each of Lessee and
Lessor hereby irrevocably agrees that any suit, action or proceeding related to
this Lease or any of the other Operative Documents to which it is a party or
the subject matter hereof or thereof or any of the transactions contemplated
hereby and thereby may be instituted in, and submits for itself and its
property to the non-exclusive jurisdiction of, (i) the courts of the State of
New York in New York County and (ii) the United States District Court for the
Southern District of New York. Each of Lessee and Lessor represents and
warrants that it is not currently entitled to, and agrees that to the extent
that Lessee or Lessor hereinafter may acquire, any immunity (including, without
limitation, sovereign immunity) from jurisdiction of any court or from any
legal process, it hereby, to the extent permitted by Law, waives such
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immunity, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of the above-named courts that it is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that this Lease or any of the other Operative
Documents or the subject matter hereof or thereof or any of the transactions
contemplated hereby and thereby may not be enforced in or by such courts. Each
of Lessee and Lessor hereby generally consents to service of process by
registered mail, return receipt requested, addressed to it at its address set
forth in Exhibit C, or at such other office of Lessee or Lessor as from time to
time may be designated by Lessee or Lessor (as applicable) in writing to Lessee
or Lessor (as applicable), Owner Participant and Indenture Trustee. Each of
Lessee and Lessor hereby agrees that its submission to jurisdiction and its
designation of service of process by mail set forth above is made for the
express benefit of Lessor, Lessee, Owner Participant, Indenture Trustee, each
Note Holder and their successors and assigns (as applicable). Final (after all
appeals) judgment (the enforcement of which has not been stayed) against either
Lessee or Lessor obtained in any suit originally brought in the court of the
State of New York in New York County or in the United States District of New
York shall be conclusive, and, to the extent permitted by applicable Law, may
be enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial
proceedings, against Lessee or Lessor, as the case may be, or any of their
assets in the courts of any country or place where such Person or such assets
may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS 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
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voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
(n) Limitation on Recourse. The parties hereto agree
that all statements, representations, covenants and agreements made by Lessor
(when made in its capacity as such and not in its individual capacity)
contained in this Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and establishing the
existence of rights and remedies that can be exercised and enforced against the
Trust Estate. Therefore, no recourse shall be had with respect to anything
contained in this Agreement (except for any express provisions that Lessor is
responsible for in its individual capacity), against Lessor in its individual
capacity or against any institution or person that becomes a successor trustee
or co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling Person or Persons of any of them; provided that (i) this
Section 21(n) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable and (ii) nothing contained in
this Section 21(n) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this
Section 21(n) shall survive the termination of this Agreement and the other
Operative Documents.
(o) Successor Trustee. Lessee agrees that in the
case of the appointment of any successor Owner Trustee pursuant to the terms of
the Trust Agreement, such successor Owner Trustee shall, upon written notice by
such successor Owner Trustee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner of the Aircraft
for all purposes hereof without the 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
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exercised repeatedly as long as this Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree
that the Original Head Lease, as amended and restated by this Amended and
Restated Aircraft Lease Agreement [GPA 1989 BN-8] (and as otherwise extended,
amended, modified, renewed or supplemented), shall be governed by Article 2-A
of the Uniform Commercial Code of New York.
-117-
<PAGE> 123
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:
-118-
<PAGE> 124
ANNEX I
to
Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
<PAGE> 125
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 66
Stipulated
Loss Value
Date
(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, "Stipulated Loss Value Date" shall mean the ___
day of each calendar month.
(2) Thereafter, such amount as determined in accordance with Section
20(ii) of the Lease.
A-1
<PAGE> 126
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-1
<PAGE> 127
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-2
<PAGE> 128
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-3
<PAGE> 129
EXHIBIT C
to
Amended and Restated Aircraft Lease Agreement
DEFINITIONS AND VALUES
<TABLE>
<S> <C>
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
________], as set forth in Schedule I hereto.
Basic Rent
Payment Date: Each such date set forth as such on Schedule I hereto.
Letter of Credit
Face Amount: The amount set forth as such on Schedule I hereto
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,
Account No. ____ and thereafter (and at all times with respect to Excepted Payments)
to _____, 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 during the Basic Term (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 Date shall be made on the next succeeding Business Day.
</TABLE>
C-1
<PAGE> 130
<TABLE>
<S> <C>
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: (302) 651-8882
Attention: Corporate Trust Administration
</TABLE>
C-2
<PAGE> 131
EXHIBIT D-1
to
Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT [GPA 1989 BN-8] NO. 3, dated June ___, 1997,
between WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual
capacity but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-8]
dated December 19, 1989, 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
Aircraft Lease Agreement [GPA 1989 BN-8] dated as of December 19, 1989, as
Amended and Restated as of June __, 1997 (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-8] No. 1 dated December 29, 1989
("Lease Supplement No. 1") and that certain Lease Supplement [GPA 1989 BN-8]
No. 2 dated December 29, 1994 ("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 leased to Lessee and
Lessee hereby confirms that it has leased from Lessor that certain Airbus Model
A320-231 commercial jet
D-1
<PAGE> 132
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
29, 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
5, 2013 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, 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-2
<PAGE> 133
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-3
<PAGE> 134
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-4
<PAGE> 135
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this _______ day of June, 1997
and consents to the terms hereof.
The Chase Manhattan Bank, not in
its individual capacity, but
solely as Indenture Trustee
By:___________________________
Title:
D-5
<PAGE> 136
SCHEDULE 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
U.S. Registration No. Manufacturers
Serial No.
N627AW 66
Installed
IAE
Engines
Model No. Serial No.
V2500 V0033
V2500 V0041
D-6
<PAGE> 137
EXHIBIT D-2
to
Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-7
<PAGE> 138
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-1
<PAGE> 139
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-2
<PAGE> 140
(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-3
<PAGE> 141
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.
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.
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 in writing to the addition of a
particular
F-1
<PAGE> 142
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> 143
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 Philippines
Denmark Portugal
Egypt Republic of China (Taiwan)*
Finland Singapore
France South Africa
Germany South Korea
Greece 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> 144
(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> 1
EXHIBIT 4.17
THE RIGHTS OF LESSOR UNDER THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-11] 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, FORMERLY KNOWN AS CHEMICAL BANK, SUCCESSOR BY MERGER TO
MANUFACTURERS HANOVER TRUST COMPANY, AS INDENTURE TRUSTEE UNDER AN AMENDED AND
RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [GPA 1989 BN-11] DATED AS OF
JUNE __, 1997. AS PROVIDED IN SECTION 21(e) HEREOF, TO THE EXTENT, IF ANY,
THAT THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL
PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AMENDED AND RESTATED
AIRCRAFT LEASE AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF
ANY COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED
AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE CHASE
MANHATTAN BANK, AS INDENTURE TRUSTEE, ON THE SIGNATURE PAGE THEREOF.
- --------------------------------------------------------------------------------
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
[GPA 1989 BN-11]
Dated as of December 19, 1989
Amended and Restated as of June __, 1997
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-11] dated
as of December 19, 1989, as amended
Lessor
and
AMERICA WEST AIRLINES, INC.
Lessee
One Airbus A320-231 Aircraft
Manufacturer's Serial No. 81
U.S. Registration No. N632AW
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Agreement to Lease . . . . . . . . . . . . . . . . . . . . . . 21
Section 3. Delivery and Acceptance; Term . . . . . . . . . . . . . . . . 21
(a) Time of Delivery . . . . . . . . . . . . . . . . . . . . 21
(b) [Intentionally Left Blank] . . . . . . . . . . . . . . . 21
(c) Acceptance of Aircraft . . . . . . . . . . . . . . . . . 22
(d) Term of Lease . . . . . . . . . . . . . . . . . . . . . 22
Section 4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Minimum Payments . . . . . . . . . . . . . . . . . . . . 22
(c) Date, Place and Method of Payment . . . . . . . . . . . . 23
(d) Prohibition Against Setoff, Counterclaim, Etc. . . . . . 24
Section 5. Representations, Warranties and Covenants . . . . . . . . . . . 25
(a) Warranties and Disclaimer of Warranties . . . . . . . . . 25
(b) Representations and Warranties of Lessor . . . . . . . . 27
(c) No Amendments to Financing Documents . . . . . . . . . . 27
(d) Suppliers' Warranties . . . . . . . . . . . . . . . . . . 27
Section 6. Possession and Use . . . . . . . . . . . . . . . . . . . . . . 28
(a) Possession . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Reciprocal Recognition of Rights . . . . . . . . . . . . 35
(c) Lawful Insured Operations . . . . . . . . . . . . . . . . 35
(d) Maintenance . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . 41
(c) Maintenance of Status . . . . . . . . . . . . . . . . . . 42
(d) Payment of Taxes . . . . . . . . . . . . . . . . . . . . 42
(e) Consolidation, Merger, Etc. . . . . . . . . . . . . . . . 42
(f) Information . . . . . . . . . . . . . . . . . . . . . . . 43
(g) Place of Business . . . . . . . . . . . . . . . . . . . . 44
(h) Certain Limitations on Use . . . . . . . . . . . . . . . 44
(i) Section 1110 . . . . . . . . . . . . . . . . . . . . . . 45
(j) Permits and Licenses . . . . . . . . . . . . . . . . . . 45
(k) Security Opinion; Annual Certificate . . . . . . . . . . 45
(l) Letter of Credit . . . . . . . . . . . . . . . . . . . . 47
Section 9. Replacement of Parts; Alterations, Modifications and Additions 49
(a) Replacement of Parts . . . . . . . . . . . . . . . . . . 49
(b) Alterations, Modifications and Additions . . . . . . . . 50
(c) Pooling . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
-i-
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<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
Section 10. General Tax Indemnification . . . . . . . . . . . . . . . 53
(a) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 53
(b) Exclusions . . . . . . . . . . . . . . . . . . . . . . . 56
(c) Covered Income Tax . . . . . . . . . . . . . . . . . . . 59
(d) Reports and Returns . . . . . . . . . . . . . . . . . . . 60
(e) After-Tax Basis . . . . . . . . . . . . . . . . . . . . . 61
(f) Tax Benefit . . . . . . . . . . . . . . . . . . . . . . . 61
(g) Payment . . . . . . . . . . . . . . . . . . . . . . . . . 62
(h) Contest . . . . . . . . . . . . . . . . . . . . . . . . . 62
(i) Refund . . . . . . . . . . . . . . . . . . . . . . . . . 64
(j) Diligence . . . . . . . . . . . . . . . . . . . . . . . . 64
(k) Affiliated Group . . . . . . . . . . . . . . . . . . . . 64
(l) Survival . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 11. Loss, Damage and Requisition . . . . . . . . . . . . . . 64
(a) Event of Loss with Respect to the Airframe . . . . . . . 65
(b) Event of Loss with Respect to an Engine . . . . . . . . . 67
(c) Conveyance of Replacement Airframe . . . . . . . . . . . 68
(d) Application of Proceeds and Payments . . . . . . . . . . 71
(e) Requisition for Use by Government with Respect to
the Aircraft . . . . . . . . . . . . . . . . . . . . . . 71
(f) Application in Default . . . . . . . . . . . . . . . . . 72
Section 12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 72
(a) Public Liability and Property Damage Insurance. . . . . 72
(b) Insurance Against Loss or Damage . . . . . . . . . . . . 74
(c) Application of Insurance Proceeds for an Event of
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(d) Application of Insurance Proceeds for Other than
an Event of Loss . . . . . . . . . . . . . . . . . . . . 78
(e) Application in Default . . . . . . . . . . . . . . . . . 78
(f) Certificates . . . . . . . . . . . . . . . . . . . . . . 79
(g) Reinsurance . . . . . . . . . . . . . . . . . . . . . . . 79
(h) Storage . . . . . . . . . . . . . . . . . . . . . . . . . 80
(i) Amounts Held . . . . . . . . . . . . . . . . . . . . . . 80
(j) After the Term . . . . . . . . . . . . . . . . . . . . . 80
(k) Governmental Indemnity . . . . . . . . . . . . . . . . . 81
Section 13. General Indemnity . . . . . . . . . . . . . . . . . . . . 81
Section 14. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 15. Protection of Title and Further Assurances . . . . . . . 87
Section 16. Return of Aircraft and Records . . . . . . . . . . . . . 89
(a) Return . . . . . . . . . . . . . . . . . . . . . . . . . 89
(b) Status Upon Return . . . . . . . . . . . . . . . . . . . 89
(c) Engines . . . . . . . . . . . . . . . . . . . . . . . . . 90
(d) Records and Documents . . . . . . . . . . . . . . . . . . 91
(e) Condition of Aircraft . . . . . . . . . . . . . . . . . . 92
(f) Final Inspection . . . . . . . . . . . . . . . . . . . . 92
(g) Aircraft Records and Documents . . . . . . . . . . . . . 93
(h) Corrections and Subsequent Corrections . . . . . . . . . 93
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
(i) Functional Flight Check . . . . . . . . . . . . . . . . . 94
(j) Export Certificate of Airworthiness . . . . . . . . . . . 94
(k) Service Bulletin and Modification Kits . . . . . . . . . 94
(l) Storage Upon Return . . . . . . . . . . . . . . . . . . . 95
(m) Resale/Release Cooperation . . . . . . . . . . . . . . . 95
Section 17. Events of Default . . . . . . . . . . . . . . . . . . . . 95
Section 18. Remedies . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 19. Security for Obligations . . . . . . . . . . . . . . . . 103
Section 20. Renewal Option . . . . . . . . . . . . . . . . . . . . . 104
Section 21. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 105
(a) Severability, Amendment, and Construction . . . . . . . . 105
(b) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 106
(c) Notices . . . . . . . . . . . . . . . . . . . . . . . . . 106
(d) Lessor's Right to Perform for Lessee . . . . . . . . . . 106
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . 107
(f) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . 107
(g) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 107
(h) Investment of Funds . . . . . . . . . . . . . . . . . . . 107
(i) Entire Agreement; Amendment . . . . . . . . . . . . . . . 108
(j) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 108
(k) Federal Bankruptcy Code . . . . . . . . . . . . . . . . . 108
(l) U.S. Registration Number . . . . . . . . . . . . . . . . 109
(m) Submission to Jurisdiction; Service of Process;
Waiver of Forum Non Conveniens; Waiver of Jury
Trial . . . . . . . . . . . . . . . . . . . . . . . . . . 109
(n) Limitation on Recourse . . . . . . . . . . . . . . . . . 110
(o) Successor Trustee. . . . . . . . . . . . . . . . . . . . 111
(p) Article 2-A of the UCC. . . . . . . . . . . . . . . . . . 111
</TABLE>
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<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
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<PAGE> 6
AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT
THIS AMENDED AND RESTATED AIRCRAFT LEASE AGREEMENT dated as of December 19,
1989 and amended and restated as of June ___, 1997 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-11] 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 S E T H:
WHEREAS, Lessor and Lessee desire to amend and, solely for the
convenience of the parties, restate in its entirety the Original Head Lease (as
hereinafter defined) as of the Restatement Date (as hereinafter defined) as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Lessor and Lessee agree as follows:
Section 1. Definitions.
The following terms shall have the following respective meanings for
all purposes of this Lease (including the Recitals) and shall be equally
applicable to both the singular and the plural forms of the terms defined
herein:
As used herein, the terms "Assigned Sublease", "Equipment Notes",
"Excepted Payments", "Indenture Supplement", "Note Holder", "Pass Through
Trust", "Pass Through Trust Agreement", "Pass Through Trustee", "Past Due
Rate", "Principal Amount", "Refinancing Transaction", "Refunding Agreement",
"Restatement Date", "Sublease Assignment", "Trust Company" and "Trust Indenture
Estate" shall have the meanings specified in the Indenture; the terms
"Intercreditor Agreement", "Liquidity Facility", "Liquidity Provider" and
"Subordination Agent" shall have the meanings specified in the Intercreditor
Agreement (as defined in the Pass Through Trust Agreement); and the terms "OP
Guarantee", "Lease Amendment No. 1" and "SLV Letter Agreement" shall have the
meanings specified in the Refunding 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 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
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<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 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
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<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
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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 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.
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<PAGE> 11
"Code" shall mean the Internal Revenue Code of 1986, as amended and
the rules and regulations promulgated thereunder.
"Commonly Controlled Person" shall mean an entity, whether or not
incorporated, which is under common control with Lessee within the meaning of
Section 414(b) or (c) of the Code.
"Consent and Guaranty" shall mean the Amended and Restated Consent and
Guaranty of Airbus Industrie, dated as of May 1, 1985, as amended and restated
as of December 30, 1988, in the form attached to the Purchase Agreement.
"Default" shall mean an event or condition which would constitute an
Event of Default with the lapse of time or the giving of notice or both.
"Delivery Date" shall mean December 29, 1989, being the date the
Aircraft was delivered to and accepted by the Original Head Lessee as Lessee
hereunder for all purposes of this Lease.
"$" and "dollars" shall mean the lawful currency of the United States
of America.
"Engine" shall mean (i) each of the two IAE Model V2500 engines listed
by manufacturer's serial number in Lease Supplement No. 1 and initially
installed on the Airframe covered by such Lease Supplement, whether or not from
time to time thereafter no longer installed on the Airframe or installed on any
other aircraft or airframe, and (ii) any replacement engine which may from time
to time be substituted, pursuant to Section 6(a), 11(a), 11(b) or 16(c), for
any Engine leased hereunder; together in each case with any and all Parts
incorporated or installed in or attached thereto or any and all Parts removed
therefrom so long as title thereto after removal from such Engine shall remain
vested in Lessor in accordance with the terms of Section 9 hereof. Except as
otherwise set forth herein, at such time as a replacement engine shall be so
substituted and leased hereunder and the replacement engine shall have been
subjected to the Lien of the Indenture (if the Lien of the Indenture has not
been discharged), such replaced Engine shall cease to be an Engine hereunder.
The term "Engines" means, as of any date of determination, both Engines then
leased hereunder.
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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 a 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 ended December 31,
1996, have been provided to Lessor prior to the date hereof.
"Financing Documents" shall mean the Lease Agreement, each Lease
Supplement, the Lease Amendment No. 1, the Trust Agreement, each Trust
Supplement, the Indenture,
-8-
<PAGE> 14
each Indenture Supplement, the Refunding Agreement, the Equipment Notes issued
under the Indenture, the Intercreditor Agreement, each Liquidity Facility, each
Pass Through Trust Agreement and each supplement thereto and any certificate
delivered or entered into in accordance with the foregoing, as amended,
supplemented or otherwise modified.
"Foreign Air Carrier" shall mean any air carrier listed in Exhibit
F-1, as amended, supplemented or otherwise modified from time to time, whose
principal place of business and legal domicile at the time of entering into the
applicable sublease is located in a country listed on Exhibit F-2, as amended,
supplemented or otherwise modified from time to time, and not prohibited by the
terms of the insurance then in effect, with which the United States has
diplomatic or, such as in the case of Taiwan, similar relations, in each case
which is obligated under the applicable sublease to perform all maintenance
required by applicable foreign governmental standards made mandatory to the
Aircraft by such jurisdiction and, to the extent not inconsistent therewith,
all FAA-airworthiness directives and other requirements made mandatory to the
Aircraft by the FAA.
"GAAP" shall mean United States generally accepted accounting
principles and practices consistently applied as in effect from time to time,
which shall include the official interpretations thereof by the Financial
Accounting Standards Board. All accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in accordance with GAAP.
"Governmental Entity" shall mean and include (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in (i) or (ii) above
is a member or to whose jurisdiction any such entity is subject or in whose
activities any such entity is a participant but only to the extent that any
entity described in clause (i), (ii) or (iii) has jurisdiction over Lessor,
Lessee, Indenture Trustee, Note Holders, any sublessee, the Aircraft or its
operations.
"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
general partners (and not the limited partners, if any) of 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, employees,
subsidiaries, Affiliates and shareholders.
"Indenture" shall mean the First Amended and Restated Trust Indenture
and Security Agreement [GPA 1989 BN-11] dated as of June ___, 1997, as the same
may be further amended, supplemented or modified from time to time, between
Indenture Trustee and Lessor. The term "Indenture" shall also include the
Indenture Supplements entered into pursuant to the terms of the Indenture.
"Indenture Trustee" shall mean the bank or trust company serving as
Indenture Trustee under the Indenture, and its successors and assigns.
"Interest Rate" shall mean (i) with respect to the portion of any
payment of Rent that may be required by the Indenture to be paid to the holders
of any outstanding Equipment Notes issued thereunder, a per annum rate of
interest equal to the Past Due Rate applicable thereto under and as defined in
the Indenture computed on the basis of a 360-day year and twelve 30-day months
and (ii) with respect to any other amount, a per annum rate of interest equal
to the sum of the rate of interest publicly announced by Citibank, N.A., at its
principal office in New York City, as its prime or similar base rate from time
to time in effect from the date the amount becomes due to the date it is paid
in full, plus 2%, computed on the basis of a year of 365 or 366 days, as the
case may be, and actual number of days elapsed.
"Law" shall mean and include (i) any statute, rule, decree,
constitution, regulation, order, judgment or other directive of any
Governmental Entity; (ii) any treaty,
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<PAGE> 16
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 an Exhibit of this Lease, as so amended, supplemented or modified,
unless expressly provided to the contrary.
"Lease Identification" shall have the meaning set forth in Section
6(e) hereto.
"Lease Supplement" shall mean Lease Supplement No. 1, Lease Supplement
No. 2 and Lease Supplement No. 3 and each subsequent Lease Supplement entered
into hereunder.
"Lease Supplement No. 1" shall mean Lease Supplement [GPA 1989 BN-11]
No. 1 dated the Delivery Date between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 2" shall mean Lease Supplement [GPA 1989 BN-11]
No. 2 dated January 5, 1995, between Lessor and Original Head Lessee, as
Lessee.
"Lease Supplement No. 3" shall mean Lease Supplement [GPA 1989 BN-11]
No. 3, substantially in the form of Exhibit D-1 hereto, entered into between
Lessor and Lessee on the Restatement Date for the purpose of confirming the
leasing of the Aircraft hereunder.
"Lenders' Lien" shall mean any Lien or disposition of title
attributable to Indenture Trustee in its individual capacity (and not as
Indenture Trustee) on or in respect of (as the case may be) the Aircraft or any
other portion of the Trust Estate or the Trust Indenture Estate arising as a
result of (i) Claims against Indenture Trustee in its individual capacity (and
not as Indenture Trustee) not related to its interest in the Aircraft or the
administration of the Trust Estate or the Trust Indenture
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<PAGE> 17
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, any partner of the 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, any partner of the 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, Owner
Participant, any partner of the 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
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<PAGE> 18
or the Financing Documents or by Original Head Lessee under the Original Head
Lease Tax Indemnification Agreement; (iv) claims against the Trust Estate,
Trust Company, Owner Participant, any partner of the Owner Participant or
Lessor or any of their Affiliates arising out of the transfer of all or any
part of their respective interest in the Aircraft, the Airframe, either Engine,
the Trust Estate, the Operative Documents or the Financing Documents other than
any transfers or dispositions pursuant to Sections 2, 6, 9, 11, 16, 18, 19 or
20 (except Liens resulting from a transfer not permitted by such Section) of
this Lease or pursuant to Section 10 of the Refunding Agreement; provided,
however, that there shall be excluded from this definition and Lessor shall not
be required to remove any Lien which would otherwise constitute a Lessor's
Lien, if it is being diligently contested in good faith so long as neither such
proceedings nor Lien involves a material danger of the sale, forfeiture or loss
of the Aircraft or adversely affects Lessee's rights under Section 21(f); and
provided, further, that Lessor's Liens shall not include the Lien of the
Indenture or Lenders' Liens.
"Lien" shall mean any mortgage, chattel mortgage, pledge, lien,
charge, encumbrance, lease, exercise of rights, security interest, lease in the
nature of a security interest, statutory right in rem, or claim of any kind,
including any thereof arising under any conditional sale agreement, equipment
trust agreement or title retention agreement.
"Lien of the Indenture" shall mean the Lien created by the Indenture
on the Trust Indenture Estate.
"Maintenance Program" shall mean (i) the America West Maintenance
Program approved by the FAA for America West Airbus model A320-231 aircraft in
effect on the date hereof or as modified with the approval of the FAA without
affecting, or any other FAA approved maintenance program which does not affect,
the return condition standards set forth in Section 16 and Exhibit E or (ii) if
the Aircraft is subject to a Permitted Sublease to a Foreign Air Carrier, any
other maintenance program for the Aircraft which is approved by the aviation
authority of the country of registry and complies with the requirements
applicable to maintenance of the Aircraft contained in the definition of
Foreign Air Carrier. The Maintenance Program shall encompass scheduled
maintenance, condition monitored maintenance, and on-condition maintenance of
the Airframe, Engines, and components of the Aircraft, including, but not
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<PAGE> 19
limited to, servicing, testing, preventive maintenance, repairs, structural
inspections, structure life improvements, system checks, overhauls, approved
modifications, service bulletins, engineering orders, airworthiness directives,
and corrosion control inspections and treatments. All modifications and
supplements to the Maintenance Program shall be provided to Lessor upon its
reasonable request and Lessor shall be given reasonable access to the
Maintenance Program upon its request.
"Manufacturer" shall mean, collectively, Manufacturer's Subsidiary,
IAE, Airbus Industrie or, as the case may be, any one or more thereof as may be
applicable in any given circumstance, together in each case with any
subcontractor or supplier thereof.
"Manufacturer's Subsidiary" shall mean AVSA, S.A.R.L., a French
societe a responsabilite limitee, which as of the date hereof is owned by
Airbus Industrie.
"Maximum Foreign Use Percentage" shall have the meaning specified in
Exhibit C.
"Mortgage Convention" shall mean the Convention for the International
Recognition of Rights in Aircraft, signed (ad referendum) at Geneva,
Switzerland, on June 19, 1948, and amended from time to time, but excluding the
terms of any adhesion thereto or ratification thereof containing reservations
to which the United States of America does not accede.
"Net Worth" shall mean, with respect to any Person, such Person's
stockholders' equity minus any intangible assets.
"Operative Documents" shall mean this Lease, each Lease Supplement,
any sublease, the Tax Indemnification Agreement, the Financing Documents, the
SLV Letter Agreement, and any certificate delivered or entered into pursuant to
the foregoing, as amended, supplemented or otherwise modified.
"Original Head Lease" shall mean this Aircraft Lease Agreement [GPA
1989 BN-11], 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.
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<PAGE> 20
"Original Head Lease Tax Indemnification Agreement" shall mean the
Head Lease Tax Indemnification Agreement [GPA 1989 BN-11], dated as of December
19, 1989, and amended and restated as of the Restatement Date, between the
Original Head Lessee and Owner Participant, as amended, supplemented or
otherwise modified from time to time.
"Original Head Lessee" shall mean GPA Leasing USA Sub I, Inc., a
Connecticut corporation.
"Original Sublease" shall mean the Initial Sublease (as defined in the
Original Head Lease) as in effect immediately prior to the Restatement Date.
"Other Leases" shall mean the Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-7] amended and restated as of the Restatement Date
between Wilmington Trust Company as Owner Trustee, Lessor, and America West
Airlines, Inc. as Lessee, the Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-8] amended and restated as of the Restatement Date between
Wilmington Trust Company as Owner Trustee, Lessor, and America West Airlines,
Inc. as Lessee and the Amended and Restated Aircraft Lease Agreement [GPA 1989
BN-9] amended and restated as of the Restatement Date between Wilmington Trust
Company as Owner Trustee, Lessor, and America West Airlines, Inc. as Lessee,
each as amended, supplemented or otherwise modified from time to time.
"Other Letters of Credit" shall mean any and all letters of credit
pursuant to Section 8(l) of the Other Leases.
"Owner Participant" shall mean ______________, 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.
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<PAGE> 21
"Participation Agreement" shall mean the Participation Agreement [GPA
1989 BN-11], dated as of December 19, 1989, among Original Head Lessee, Parent,
Owner Participant, Owner Trustee, Indenture Trustee and the "Lender" 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.
"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.
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<PAGE> 22
"Purchase Agreement" shall mean the Amended and Restated Airbus
A310/A320 Purchase Agreement, dated as of May 1, 1985, as amended and restated
as of December 30, 1988 (insofar as the same relates to Model A320 Aircraft),
between Manufacturer's Subsidiary and Braniff, Inc., including the Consent and
Guaranty, together with Letter Agreements, Exhibits and Appendices thereto, as
partially assigned to Parent pursuant to the Partial Assignment, to which
Airbus Industrie, as guarantor, has consented, and as the same may from time to
time be further amended, supplemented or otherwise modified to the extent
permitted by the terms thereof.
"Purchase Documents" shall mean the Purchase Agreement, the Partial
Assignment and any other agreement, document or certificate delivered or
entered into pursuant to the foregoing, as amended, supplemented or otherwise
modified.
"Removable Part" shall have the meaning set forth in Section 9(b).
"Renewal Rent" shall mean the rent payable pursuant to Section 20.
"Renewal Rent Payment Date" shall mean each day determined in
accordance with Exhibit C upon which a payment of Renewal Rent becomes payable.
If a Renewal Rent Payment Date shall fall on a day which is not a Business Day,
any payment due on such Renewal Rent Payment Date shall be made on the next
succeeding Business Day.
"Renewal Term" shall mean the period described in Section 20 following
the end of the Basic Term if Lessee shall have exercised its renewal option in
accordance with Section 20.
"Rent" shall mean Basic Rent or Renewal Rent, as the case may be, and
Supplemental Rent, collectively.
"Replacement Airframe" and "Replacement Engine" shall have the
meanings specified in accordance with their description in Section 11.
"Replacement Period" shall have the meaning specified in Section 11.
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<PAGE> 23
"Responsible Officer" shall mean, with respect to Lessee, any of the
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer or
Controller.
"Restricted Use Period" shall have the meaning specified in Exhibit C.
"Return Occasion" shall mean the event that occurs when possession of
the Aircraft is to be returned from Lessee to Lessor at the end of the Term of
this Lease or upon Lessor taking possession pursuant to Section 18 or for any
other reason.
"Specified Investments" shall mean (i) direct obligations of the
United States Government, the obligations of which bear the full faith and
credit of the United States; (ii) obligations fully guaranteed by the United
States; (iii) certificates of deposit issued by any commercial bank
incorporated under the laws of the United States or one of the States thereof
(but not exceeding $10,000,000 in principal amount or deposits at any given
time for any one bank) having a combined capital surplus and undivided income
of at least $750,000,000 and having a rating of "B" or better from Thompson
BankWatch, Inc.; (iv) repurchase agreements (but not exceeding $10,000,000 in
principal amount or deposits at any given time for any one bank) with any
financial institution having combined capital 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 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) or (ii); 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
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<PAGE> 24
Section 20 (it being understood and agreed that the amounts set forth in
Exhibit A take into account fully the amount and application of each
installment of Basic Rent or Renewal Rent on each Stipulated Loss Value Date
[(other than a Stipulated Loss Value Date that is a Basic Rent Payment Date or
Renewal Rent Payment Date) so that no additional credit of such Basic Rent or
Renewal Rent is to be made in respect thereof except as expressly provided
herein on a Basic Rent Payment Date or a Renewal Rent Payment Date)]. In the
event that it is necessary to determine a separate Stipulated Loss Value for
the Airframe or an Engine, such Stipulated Loss Value shall be based on the
ratio that the original cost to Lessor of the Airframe or such Engine bears to
Lessor's Cost (as set forth in the Original Head Lease) for the Aircraft.
"Stipulated Loss Value Date" shall mean each monthly date listed, or
with respect to any Renewal Term determined as set forth, on Exhibit A hereto.
"Supplemental Rent" shall mean any and all amounts, liabilities and
obligations other than Basic Rent and Renewal Rent which Lessee assumes or
agrees to pay to Lessor or any other Indemnitee hereunder or under any other
Operative Document, including, without limitation, (i) any payment of
Stipulated Loss Value and any payment provided for in Section 11 or 18; (ii)
any payment of indemnity required by Section 10 or 13 hereof; (iii) any payment
of an amount equal to average daily Basic Rent or Renewal Rent in connection
with an extension of the Term of this Lease as a result of (a) an incipient
Event of Loss and the operation of Section 11 hereof or (b) the need to correct
any failure of the Aircraft to satisfy the requirements of Section 16 and
Exhibit E hereof; (iv) [Intentionally Left Blank]; (v) an amount equal to any
payment due to the Owner Trustee in respect of fees or expenses as provided in
Section 21(j) hereof; (vi) an amount equal to any payment due to the Indenture
Trustee in respect of fees or expenses as provided in the Indenture and/or
Section 21(j) hereof; (vii) the Pro Rata Share of any payment due to any Pass
Through Trustee in respect of fees or expenses pursuant to the Pass Through
Trust Agreement; (viii) the Pro Rata Share of any payment due to the
Subordination Agent in respect of fees, compensation, costs or expenses
pursuant to the Intercreditor Agreement; (ix) an amount equal to the amount
specified in clause (b) of the fourth paragraph of Section 2.02 of the
Indenture; and (x) to the extent permitted by applicable Law, interest at the
Interest Rate calculated: (1) on any part of any installment of Basic Rent or
Renewal Rent, or average daily Basic Rent referred to in clause
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<PAGE> 25
(iii) of this definition of "Supplemental Rent", as the case may be, not paid
on the due date thereof for the period for which the same shall be overdue and
(2) on any Supplemental Rent not paid when due hereunder from and including the
due date until the same shall be paid. As used herein, "Pro Rata Share" means
as of any date of determination a fraction the numerator of which is the
aggregate Principal Amount then outstanding of the Equipment Notes issued under
the Indenture and the denominator of which is the aggregate principal balance
then outstanding of all "equipment notes" issued under the Indentures (as
defined in the Intercreditor Agreement).
"Tax Indemnification Agreement" shall mean the Amended and Restated
Sublease Tax Indemnification Agreement [GPA 1989 BN-11], dated as of September
21, 1990, and as amended and restated as of the Restatement Date, between
Original Head Lessee and Lessee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Taxes" shall have the meaning specified in Section 10(a).
"Taxing Authority" shall have the meaning specified in Section 10(a).
"Term" shall mean, collectively, the Basic Term specified in Lease
Supplement No. 3 and, if Lessee extends the Term in accordance with Section 20,
the Renewal Term, in either case as extended or deemed extended as a result of
the occurrence of an event described in clause (iii) to the definition of
"Supplemental Rent" in this Lease, for which the Aircraft is leased hereunder
pursuant to Section 2.
"Trust Agreement" shall mean the Trust Agreement [GPA 1989 BN-11]
dated as of December 19, 1989 as amended by Trust Supplement No. 1 and as
further amended by Trust Supplement No. 2 between Lessor, in its individual
capacity, and Owner Participant, as beneficiary, as the same may be amended,
supplemented or otherwise modified from time to time. The term "Trust
Agreement" shall also include each Trust Supplement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trust Supplement" shall mean Trust Supplement No. 1 and Trust
Supplement No. 2 and each subsequent Trust
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Supplement entered into thereunder and any further supplement to the Trust
Agreement.
"Trust Supplement No. 1" shall mean Trust Agreement Supplement [GPA
1989 BN-11] 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-11] No. 2 dated the Restatement Date between Lessor and Owner
Participant conforming the references in the Trust Agreement to this Agreement.
"United States Government" shall mean the federal government of the
United States of America and any board, commission, department, division,
organ, instrumentality, court or agency thereof.
"Wet Lease" shall mean any arrangement whereby Lessee agrees to
furnish the Aircraft or the Airframe and Engine or engines installed thereon at
that time to a third party pursuant to which such Aircraft or the Airframe and
Engine or engines (i) shall be operated solely by regular employees of Lessee
possessing all current certificates and licenses required under the Federal
Aviation Act (it is understood that cabin attendants need not be regular
employees of Lessee) and Lessee otherwise maintains operational control and
possession thereof, and (ii) shall be maintained by Lessee in accordance with
its normal maintenance practices and this Lease, and otherwise the insurance
required hereunder shall be maintained and the Aircraft shall be used and
operated in accordance with this Lease.
Section 2. Agreement to Lease. Lessor hereby agrees to lease the
Aircraft to Lessee, and Lessee hereby agrees to lease the Aircraft from Lessor,
on the terms and subject to the conditions set forth in this Lease.
Section 3. Delivery and Acceptance; Term.
(a) Time of Delivery. The Aircraft was delivered to Lessee, and
Lessee accepted delivery of the Aircraft, on December 29, 1989.
(b) [Intentionally Left Blank]
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(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, except for Supplemental Rent constituting interest on
overdue amounts, which shall be due and payable on demand. In the event of any
failure on the part of Lessee to pay any Supplemental Rent when due, Lessor
shall have all rights, powers and remedies provided for herein or by law or
equity or otherwise in the case of nonpayment of Basic Rent or Renewal Rent.
Lessee's obligation to pay Supplemental Rent which is due and owing pursuant to
the terms hereof shall survive the expiration or termination of Lessee's
obligation to pay Basic Rent or Renewal Rent hereunder.
(b) Minimum Payments. Notwithstanding any provision in this Lease or
in any other Operative Document to the contrary, under all circumstances and in
any event, (i) the Stipulated Loss Value, together with the payment of
Supplemental Rent and all other Rent then due hereunder, as of any time and as
of the date of any payment thereof shall
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<PAGE> 28
(both before and after giving effect to any reductions therefrom) be in an
amount at least sufficient to pay in full as of such time or date the aggregate
unpaid principal amount of the Equipment Notes then outstanding and all accrued
and unpaid interest (assuming interest has been timely paid) thereon, and (ii)
Basic Rent payable on any Basic Rent Payment Date shall at least equal the
aggregate amount of principal and interest due and payable on the Equipment
Notes on such Basic Rent Payment Date. It is agreed, however, that no
installment of Basic Rent or Stipulated Loss Value shall be increased or
adjusted by reason of (A) any attachment or diversion of Rent on account of any
Lessor's Lien or Lenders' Lien, (B) any modification of the terms of the
Equipment Notes or the other Financing Documents made without the prior written
consent of Lessee or (C) the acceleration of any Equipment Note due to the
occurrence of any "Indenture Event of Default" (as defined in the Indenture)
which does not constitute an Event of Default hereunder. It is further agreed
that nothing in this Lease or any other Operative Document shall be deemed to
constitute a guaranty of the value, utility or useful life of the Aircraft or a
guaranty in respect of interest, principal or any other amounts payable in
respect of or under the Equipment Notes.
(c) Date, Place and Method of Payment. If any date on which a payment
of Rent becomes due and payable is not a Business Day, the Rent otherwise due
on such date shall be due and payable on the next succeeding Business Day. All
Basic Rent, Renewal Rent and Supplemental Rent payable under this Lease shall
be paid by wire transfer in immediately available currency of the United States
of America, no later than 12:00 p.m. (noon), New York City time, on the date
payable hereunder, and, so long as the Lien of the Indenture shall not have
been discharged, to or as directed by Indenture Trustee in accordance with the
payment instructions set forth in Exhibit C hereto or at such other address in
the City of New York or Hartford, Connecticut as Indenture Trustee may direct
by thirty (30) days prior written notice to Lessee, except for all Excepted
Payments. All Excepted Payments, and, upon discharge of the Lien of the
Indenture, all payments of Rent thereafter made hereunder, shall be paid in
such immediately available funds no later than 12:00 p.m. (noon), New York City
time, on the 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.
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(d) Prohibition Against Setoff, Counterclaim, Etc. This Lease is a
net lease. Lessee's obligations to pay all Rent and to perform all other
obligations hereunder are absolute and unconditional and shall not be affected
or reduced by any circumstances, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense, or other right which Lessee may have against
Lessor, Original Head Lessee, Owner Participant, Indenture Trustee, any Note
Holder, any Manufacturer, any Person providing services with respect to the
Aircraft, or any other Person, for any reason whatsoever (whether in connection
with the transactions contemplated hereby or otherwise), including, without
limitation, any breach by Lessor of its representations, warranties or
covenants contained herein or in the other Operative Documents; (ii) any defect
in the title, airworthiness, eligibility for registration under the Federal
Aviation Act, condition, design, operation, or fitness for use of, or any
damage to or loss or destruction of, the Aircraft (subject to the provisions of
Section 11(a)(ii) hereof), any interruption or cessation in the use of or
possession thereof by or availability to Lessee for any reason whatsoever,
whether arising out of or related to an act or omission of Lessee, Lessor,
Original Head Lessee, Owner Participant, Indenture Trustee, any Note Holder,
any Manufacturer, any Person providing services with respect to the Aircraft or
any other Person; (iii) any Liens with respect to the Aircraft; (iv) the
invalidity or unenforceability or lack of due authorization or other infirmity
of this Lease or any sublease or any absence of right, power or authority of
Lessor, Original Head Lessee, Lessee or Indenture Trustee to enter into this
Lease or the Indenture, as the case may be; (v) any insolvency, bankruptcy,
reorganization, or similar proceedings by or against Lessor, Original Head
Lessee, Lessee, any sublessee, Indenture Trustee or any Note Holder; (vi) any
Taxes; or (vii) any other circumstance or happening of any nature whatsoever,
whether or not similar to any of the foregoing; it being the expressed
intention of Lessor and Lessee that all Rent payable hereunder shall be payable
in all events, unless the obligation to pay the same shall be terminated
pursuant to the express provisions of this Agreement.
Except as expressly set forth elsewhere in this Agreement, Lessee
hereby waives, to the extent permitted by 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
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under the other Operative Documents (including, without limitation, payment of
Rent), except in accordance with the terms hereof.
Each payment of Rent made by Lessee shall be final. Lessee will not
seek to recover all or any part of any payment of Rent for any reason
whatsoever except manifest error.
If for any reason whatsoever this Lease shall be terminated in whole
or in part by operation of Law, except as specifically provided herein, Lessee
waives all rights (if any) to any diminution in its Rent obligations hereunder
and nonetheless agrees to pay to Indenture Trustee or Lessor as provided in
Section 4(c) hereof an amount equal to each Basic Rent or Renewal Rent, as the
case may be, payment and any Supplemental Rent payment at the time such
payments would have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part, and so long as such
payments are made and all other terms and conditions hereof are complied with
by Lessee, Lessor and Lessee will deem this Lease to remain in full force and
effect.
The foregoing shall not, however, be construed as a waiver of Lessee's
other rights to seek damages, specific performance, other remedies at law or
equity or any combination thereof, as against the Original Head Lessee, Lessor,
Indenture Trustee or any other Person having an interest herein through the
Original Head Lessee, Lessor, Indenture Trustee or any other Person as shall be
liable therefor, on account of any failure of the Original Head Lessee, Lessor,
Indenture Trustee or any other such Person to perform its express obligations
under this Lease and the other Operative Documents, or to enforce any judgment
obtained therefor.
Section 5. Representations, Warranties and Covenants.
(a) Warranties and Disclaimer of Warranties. THE AIRCRAFT WAS
DELIVERED AND IS BEING LEASED BY LESSOR TO LESSEE "AS IS" AND "WHERE IS".
LESSEE EXPRESSLY AGREES THAT IT TOOK THE AIRCRAFT ON SUCH BASIS. LESSOR HAS
NOT AND SHALL NOT BE DEEMED TO HAVE MADE, BY VIRTUE OF HAVING LEASED 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,
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AND LESSOR FOR ITSELF AND OWNER PARTICIPANT, HEREBY SPECIFICALLY DISCLAIMS, ANY
GUARANTY, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE
(EXCEPT AS HEREINBELOW PROVIDED), AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY, OR FITNESS FOR USE FOR A PARTICULAR OR ANY PURPOSE
OF THE AIRCRAFT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT, THE ABSENCE THEREFROM OF LATENT OR OTHER DEFECTS WHETHER OR NOT
DISCOVERABLE, THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR AS TO ANY OTHER GUARANTY, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING WITHOUT LIMITATION
ANY LIABILITY IN TORT, OBLIGATION OR LIABILITY ARISING FROM NEGLIGENCE, STRICT
LIABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE OR DEALING
OR USAGE OR TRADE, OR LOSS OR INTERRUPTION OF USE, PROFIT, OR BUSINESS, OR
OTHER CONSEQUENTIAL DAMAGES; AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND
DISCLAIMS EXPECTATION OF OR RELIANCE UPON ANY SUCH GUARANTY, REPRESENTATION OR
WARRANTIES. NEITHER LESSOR NOR ANY OTHER INDEMNITEE SHALL HAVE ANY
RESPONSIBILITY OR LIABILITY TO LESSEE OR ANY OTHER PERSON, REGARDLESS OF ANY
NEGLIGENCE (OTHER THAN ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WHICH IS
NOT ATTRIBUTABLE TO ITS INTEREST IN THE AIRCRAFT) OF LESSOR OR ANY OTHER
INDEMNITEE, AND LESSEE HEREBY WAIVES, RELEASES, RENOUNCES AND DISCLAIMS ANY
RIGHTS OR REMEDIES, WITH RESPECT TO (i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR
ALLEGED TO BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE
IN CONNECTION THEREWITH, (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT
OR ANY RISKS RELATING THERETO, (iii) ANY INTERRUPTION OF SERVICE, LOSS OF
BUSINESS OR ANTICIPATED PROFITS OR DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
OR (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR, IMPROVEMENT OR
REPLACEMENT OF THE AIRCRAFT. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN
THIS SECTION 5(a) ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR
WARRANTIES WHATSOEVER WITH RESPECT TO THE AIRCRAFT, EXPRESS OR IMPLIED, AND
LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER IMPLIED WARRANTIES, OR
GUARANTEES, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF
MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE, OR ANY IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR OR ANY USE, EXCEPT THAT: (A) Lessor represents and warrants that
(x) on the Delivery Date Lessor had, and on the Restatement Date Lessor has,
the 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
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Liens and Head Lessor's Liens and (B) Lessor covenants that it shall not
create, incur, assume or suffer to exist any Lessor's Lien on the Aircraft.
(b) Representations and Warranties of Lessor. Lessor hereby
represents and warrants, as of the Restatement Date that its representations
and warranties set forth in Section 9(b) of the Refunding Agreement were true
when made and continue to be true and correct.
(c) No Amendments to Financing Documents. Lessor covenants and agrees
that Lessor will not, without the prior written consent of Lessee, amend,
modify, supplement or waive any provision of any Financing Document in such a
way as to materially increase Lessee's obligations hereunder or materially
reduce Lessee's rights hereunder.
The representations, warranties and covenants of Lessor under Sections
5(a) and 5(b) and this Section 5(c) shall survive the execution and delivery of
this Lease and the delivery of the Aircraft and the Restatement Date.
(d) Suppliers' Warranties. So long as a Default or an Event of
Default has not occurred and is continuing and provided that the Aircraft
continues to be maintained, modified and repaired as required hereunder, Lessor
hereby assigns or, if by their terms not assignable, agrees otherwise to make
available to Lessee the right to exercise in Lessee's name such rights as
Lessor may have or may subsequently obtain (but without representation or
warranty by or recourse to Lessor) with respect to any product warranty,
service life policy, trademark, patent or copyright infringement indemnity, or
airframe or propulsion system performance guaranty, of Airbus Industrie, the
Manufacturer's Subsidiary, IAE or any subcontractor or vendor with respect
thereto under the Purchase Agreement (except those which were given directly to
Parent, the Original Head Lessee or any of their Affiliates and are not
directly related to the operator's use of the Aircraft), to the extent that the
same may be assigned or otherwise made available to Lessee, and Lessor agrees
to exert its reasonable efforts, at Lessee's expense and upon its request, to
enforce such rights as Lessor may have with respect thereto for the benefit of
Lessee; provided, however, that upon and during the continuance of a Default or
an Event of Default, such assignment or other rights which are otherwise made
available to Lessee shall immediately and automatically without further action
be deemed cancelled and, to the extent of any remaining
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interest held by Lessee, deemed reassigned to Lessor and all such rights shall
revert to Lessor automatically including all claims thereunder whether or not
perfected and all amounts payable shall be paid to and held by Lessor. In no
event, however, shall Lessee have any right to amend, supplement or otherwise
modify the Purchase Agreement (by change order or otherwise). In connection
with the foregoing, Lessee agrees to be bound by and comply with all applicable
terms, conditions and limitations of the provisions of the Purchase Agreement.
Section 6. Possession and Use.
(a) Possession.
(i) Lease, Assignment and Transfer. LESSEE WILL NOT ASSIGN THIS
LEASE OR ANY RIGHTS OR OBLIGATIONS HEREUNDER OR INTEREST HEREIN (EXCEPT AS
PROVIDED IN SECTION 8(e) BELOW) OR SUBLEASE, WET LEASE OR OTHERWISE IN ANY
MANNER TRANSFER, DELIVER OR RELINQUISH POSSESSION OR USE OF THE AIRCRAFT,
AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PERMIT ANY ENGINE TO BE
INSTALLED ON ANY AIRFRAME OTHER THAN THE AIRFRAME; provided, that, so long as
no Event of Default or Default shall have occurred and be continuing or would
result therefrom and so long as the action to be taken shall not adversely
affect Lessor's title to or other interest in, or the Lien of the Indenture on,
the Aircraft, the Airframe or either of the Engines or this Lease or the
insurance required to be maintained hereunder and Lessee is otherwise in full
compliance with Section 12, and so long as all necessary approvals of the FAA
and any other Governmental Entity having jurisdiction have been obtained, then
Lessee, without the prior written consent of Lessor, may, only to the extent
provided below and subject to the limitations of Sections 6(a)(ii) and
6(a)(iii) below:
(1) subject any Engine to a normal interchange, maintenance, servicing
or pooling agreement or similar arrangement with a Permitted Sublessee, in
each case customary in the airline industry of which Lessee is a part and
entered into in the ordinary course of its business; provided that no
transfer of the registration of any Engine shall be effected in connection
therewith; and provided, further, that (A) no such agreement or arrangement
contemplates, results in or requires the transfer of title to any Engine,
and (B) if Lessor's title to any Engine shall be divested under any such
agreement or arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to
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such Engine and not an Event of Default and Lessee shall comply with
Section 11(b) hereof in respect thereof;
(2) deliver possession of the Aircraft, the Airframe or any Engine to
the manufacturer thereof, or in accordance with the Maintenance Program to
an FAA certified repair station, for testing, service, storage, repair,
maintenance, inspection or overhaul work on such Aircraft, Airframe or
Engine or any part thereof or for alterations or modifications in or
additions to such Aircraft, Airframe or Engine to the extent required or
permitted by the terms of Section 9 hereof;
(3) transfer possession of the Aircraft or the Airframe to the United
States of America or any instrumentality or agency thereof pursuant to a
sublease;
(4) (i) subject the Airframe to the Civil Reserve Air Fleet Program
and transfer possession of the Airframe or any Engine to the United States
Government pursuant to the Civil Reserve Air Fleet Program, so long as
Lessee shall promptly notify Lessor upon transferring possession of the
Airframe or any Engine to the United States Government pursuant to the
Civil Reserve Air Fleet Program and provide Lessor with the name and
address of the Contracting Office Representative for the Military Airlift
Command of the United States Air Force to whom notices must be given; or
(ii) subject the Airframe to (A) a service contract with the United
States Government, a copy of which shall be provided to Lessor, providing
for possession to be held by the United States Government for a period not
extending beyond the end of the Term, or (B) a requisition for use by the
United States Government not constituting an Event of Loss;
(5) install an Engine on an airframe (other than the Airframe) owned
by Lessee free and clear of all Liens except (A) Permitted Liens and Liens
which apply only to engines (other than the Engines), appliances, parts,
instruments, appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe (but not to the airframe as
an entirety) and (B) the rights of participants under
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normal interchange agreements which are customary in the airline industry
and do not contemplate, permit, result in or require the transfer of title
to the airframe or engines installed thereon;
(6) install an Engine on an airframe leased to Lessee or owned by
Lessee subject to a conditional sale or other security agreement; provided
that: (A) such airframe is free and clear of all Liens except the rights
of the parties to the lease or conditional sale or other security agreement
covering such airframe and except Liens of the type permitted by clauses
(A) and (B) of Section 6(a)(i)(5) and the Lien of any mortgage which
provides that each Engine leased to Lessee hereby shall not become subject
to the Lien thereof or to any rights of any party thereunder other than
Lessee (with respect to Lessee's rights expressly granted hereunder),
notwithstanding the installation of such Engine on any airframe subject to
the Lien of such mortgage, unless and until Lessee shall become the owner
of such Engine and Lessor shall have no further interest therein, all
pursuant to the express terms of this Lease; and (B) there shall be in
effect a written agreement of the lessor or secured party of such airframe
(which may be contained in the lease or conditional sale or other security
agreement covering such airframe) substantially similar in effect to the
agreement of Lessor in Section 6(b) below whereby such lessor or secured
party effectively and expressly agrees that neither it nor its successors
or assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe at any
time while such Engine is subject to this Lease or is owned by Lessor, and
a copy of such agreement shall be provided to Lessor upon written request;
(7) install an Engine on an airframe owned by Lessee, leased to Lessee
or purchased by Lessee subject to a conditional sale or other security
agreement under circumstances where neither Section 6(a)(i)(5) or Section
6(a)(i)(6) is applicable; provided that such installation shall be deemed
an Event of Loss with respect to such Engine and Lessee shall comply with
Section 11(b) hereof in respect thereof, Lessor not intending hereby to
waive any right or interest it may have to or in such Engine under
applicable Law until compliance by Lessee with such Section 11(b);
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<PAGE> 36
(8) enter into a Wet Lease for the Aircraft or the Airframe and
engines installed thereon in the ordinary course of Lessee's business for a
period not extending beyond the Term; provided that if Lessee shall enter
into any Wet Lease for a period of more than six months (including renewal
options) Lessee shall provide to Lessor written notice of such Wet Lease
(such notice to be given at least ten (10) Business Days prior to entering
into such Wet Lease); or
(9) sublease the Aircraft or the Airframe to any Permitted Sublessee
on the terms and conditions set forth in Section 6(a)(iii) below.
(ii) Certain Limitations on Transfers. With respect to any
transfer pursuant to Section 6(a)(i):
(1) the rights of any transferee that receives possession by reason of
a transfer permitted by Section 6(a) hereof (other than the transfer of an
Engine which is deemed to have been an Event of Loss) and any Wet Lease
shall be expressly subject and subordinate to all the terms of this Lease
and the Lien of the Indenture (if it has not been discharged);
(2) Lessee's obligations hereunder and under the other Operative
Documents shall continue in full force and effect and Lessee shall remain
primarily liable hereunder for the performance of all of the terms of this
Lease to the same extent as if such transfer had not occurred and no
provision of this Lease shall be deemed a waiver of the Lessor's rights
hereunder or under the other Operative Documents nor discharge or diminish
any of Lessee's obligations hereunder or under the other Operative
Documents;
(3) During the Restricted Use Period, no Wet Lease, Permitted Sublease
or other relinquishment of possession of the Aircraft, the Airframe or any
Engine pursuant to the terms of this Section 6(a) shall be permitted if
such Wet Lease, Permitted Sublease or other relinquishment of possession
would cause the Aircraft, the Airframe or such Engine to be "tax-exempt use
property" within the meaning of Section 168(h) of the Code or cease to be
"Section 38 property" within the meaning of Section 48(a) of the Code (as
determined after the application of Section 47(a)(7) of the Code);
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<PAGE> 37
(4) The term of any transfer, Wet Lease, Permitted Sublease or other
relinquishment of possession shall not extend beyond the Basic Term or the
Renewal Term (if Lessee shall have exercised its option to renew this Lease
in accordance with the terms hereof);
(5) No transfer, Wet Lease, Permitted Sublease or other relinquishment
of possession of the Aircraft, the Airframe or any Engine shall in any way
discharge or diminish any of Lessee's obligations to Lessor or any other
Person hereunder for which obligations Lessee shall remain primarily
liable;
(6) The sublessee under any Permitted Sublease, in its consent
thereto, shall confirm that from and after the occurrence and continuance
of an Event of Default and, unless an Event of Default specified in Section
17(e), (f) or (g) of this Lease has occurred and is continuing, this Lease
being deemed or declared in default, Lessor (and, so long as the Lien of
the Indenture shall not have been discharged, Indenture Trustee) shall be
entitled to enforce directly and in its own name all representations,
warranties, indemnities, covenants and agreements under the applicable
Permitted Sublease; and
(7) Each Permitted Sublease shall (A) provide that (I) the Aircraft or
Airframe may not be operated or used other than as provided in this Lease
and shall be maintained and operated as required hereunder, (II) Lessor may
avoid or terminate such sublease following an Event of Default hereunder
and (III) to the extent not accomplished by an assignment of the Permitted
Sublease, upon the occurrence of an Event of Default hereunder, Lessee's
rights under such Permitted Sublease shall automatically be deemed assigned
to Lessor; and (B) be a "net lease" in accordance with industry practice
and shall be comparable to, or more restrictive than, this Lease and under
such Permitted Sublease (except a sublease to the United States Government
or a Foreign Air Carrier after the Restricted Use Period), Lessee as lessor
under such Permitted Sublease, must be entitled to the same benefits under
11 U.S.C. Section 1110 as Lessor is entitled hereunder and such Permitted
Sublease shall contain provisions regarding such Section 1110 which are
substantially the same as the related provisions of this Lease. In
addition, from and after the occurrence and continuance
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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, (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
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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 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
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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,
in form and substance reasonably satisfactory to Lessor and the Indenture
Trustee, within ten (10) Business Days following the effective date of such
Permitted Sublease.
(b) Reciprocal Recognition of Rights. In the event the lessor or
secured party of any airframe leased to Lessee (or a Permitted Sublessee) or
owned by Lessee (or a Permitted Sublessee) is subject to a conditional sale or
other security agreement in accordance with Section 6(a)(i)(6) hereof, and the
lease or conditional sale or other security agreement covering such airframe
also covers an engine or engines owned by the lessor under such lease or
subject to a security interest in favor of the secured party under such
conditional sale or other security agreement, Lessor hereby agrees for the
benefit of such lessor or secured party that Lessor will not acquire or claim,
as against such lessor or secured party, any right, title or interest in any
such engine as the result of such engine being installed on the Airframe at any
time while such engine is subject to such lease or conditional sale or other
security agreement and owned by such lessor or subject to a security interest
in favor of such secured party. Lessor also hereby agrees for the benefit of
the mortgagee under any mortgage complying with Section 6(a)(i)(6) hereof,
relating to installation of an Engine on an airframe leased to Lessee (or a
Permitted Sublessee), that Lessor will not acquire or claim, as against such
mortgagee, any right, title or interest in any engine subject to the lien of
such mortgage as the result of such engine being installed on the Airframe at
any time while such engine is subject to the lien of such mortgage.
(c) Lawful Insured Operations. Lessee will not permit the Aircraft,
the Airframe or any Engine to be
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<PAGE> 41
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 or (iii) which prohibits the operation or location therein
of Aircraft owned by a United States citizen. Lessee also agrees not to
operate or locate the Aircraft or suffer or permit the Aircraft to be operated
or located in any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Lease or in any war zone unless insured or
indemnified by the United States of America therefor, except in the case of
operation pursuant to a sublease or contract with, or as a result of a
requisition (not constituting an Event of Loss) by, the United States of
America, and then only if Lessee has obtained insurance or an indemnity (in
lieu of such
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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 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
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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.
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
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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 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
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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 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
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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 or any event classified as an accident by the National Transportation
Safety Board, or if such event has occurred, information about such event;
(vi) as soon as practicable after becoming aware thereof, notice
of damage or destruction to the Aircraft, either Engine or any Part with a
repair or replacement cost (including labor charges) in excess of $1,000,000;
(vii) immediately after Lessee knows or should know of the
occurrence thereof, notice of a Default; and
(viii) from time to time such other information as Lessor may
reasonably request.
(b) Maintenance of Corporate Existence. Except as provided in Section
8(e) below, during the term of this Lease, Lessee will preserve and maintain
its corporate existence and its rights, privileges, licenses and franchises
material to Lessee's ability to perform its obligations hereunder in each
applicable jurisdiction.
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(c) Maintenance of Status. Lessee is, and shall remain so long as it
shall be the Lessee under this Lease, a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, and Lessee is and
shall maintain its status at all times as a Certificated Air Carrier,
including, without limitation, its status so as to fall within the purview of
11 U.S.C. Section 1110 or any analogous statute.
(d) Payment of Taxes. Lessee will pay or cause to be paid all Taxes
imposed upon it, or upon its income or profits, or upon any property belonging
to it, on or prior to the due date thereof, including any extensions which have
been duly obtained or granted; provided, however, that Lessee shall not be
required to pay any such Taxes, the payment of which is being diligently
contested in good faith and by appropriate proceedings with appropriate
reserves so long as there is no material possibility that either failure to pay
such Taxes or such contest may result in any loss, sale, confiscation,
forfeiture or seizure of the Aircraft, the Airframe or either Engine or any
criminal liability on the part of Lessor, Indenture Trustee or any Note Holder.
(e) Consolidation, Merger, Etc. Lessee shall not liquidate or
dissolve; and Lessee shall not consolidate with or merge into or with any other
corporation or other Person, and Lessee shall not convey, transfer, lease or
otherwise dispose of all or substantially all of its property and other assets
(in one or a series of transactions) to any corporation or other Person,
unless:
(i) the Person formed by or surviving such consolidation or merger
or the Person which acquires by conveyance, transfer, lease or other
disposition all or substantially all of such property and other assets or stock
(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
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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 "predominantly outside the United
States" within the meaning of Section 48(a)(2) of the Code, or in such manner
that the percentage of the income, deduction or credit attributable to the
Aircraft, Airframe or Engines for federal income tax purposes during any
taxable year of the Lessor considered to be from foreign sources exceeds the
Maximum Foreign Use Percentage. Unless the Owner Participant otherwise agrees,
prior to permitting the Aircraft to be operated in any member state of the
European Union or other European country, Lessee shall deliver to Lessor (i) a
representation and warranty to the effect that Lessee (or any Permitted
Sublessee) has no knowledge of any dispute with Eurocontrol or other relevant
air traffic control authority over delinquent charges payable by it and (ii) a
letter from Lessee (or any Permitted Sublessee) addressed to Eurocontrol or
other relevant air traffic control authority pursuant to which Lessee (or such
Permitted Sublessee) authorizes the addressee to issue to Lessor, upon Lessor's
request from time to time, a statement of account of all sums due by Lessee (or
such Permitted Sublessee) to the authority in respect of all aircraft
(including, without limitation,the Aircraft) operated by Lessee (or such
Permitted Sublessee).
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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 (i) 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 or (ii) necessary in connection
with the execution, delivery or performance of the Operative Documents (other
than the Lease) to which Lessee is a party or the enforcement thereof against
Lessee.
(k) Security Opinion; Annual Certificate. (i) During such times that
the Aircraft is registered under the Federal Aviation Act, Lessee shall furnish
to Lessor and to Indenture Trustee:
(1) (X) prior to the expiration of the time period covered by the
opinion of counsel rendered on the Restatement Date, any opinion
of counsel rendered pursuant to Section 11(C) of the Refunding
Agreement, and any opinion of counsel rendered pursuant to this
Section 8(k)(i) and (Y) upon any change in Law that would render
the opinion of counsel rendered on the Restatement Date or such
immediately preceding opinion of counsel inaccurate, an opinion of
counsel with respect to Lessee and
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the FAA reasonably satisfactory to each addressee of such opinion
(which counsel may be internal legal counsel of Lessee and FAA
counsel) stating, in the opinion of such counsel, that such action
has been taken with respect to the recording, filing, re-recording
and refiling of (i) the appropriate Operative Documents and any
supplements and amendments thereto and (ii) such other appropriate
documents, as is necessary to maintain the perfection of Lessor's
title to and/or interest in and Indenture Trustee's security
interest in the Aircraft and the Operative Documents for such
period of time as reflects the then-current applicable Law,
reciting the details of such actions; or
(2) at any time that an opinion is not required pursuant to Section
8(k)(i)(1), annually, a certificate reasonably satisfactory to
each recipient thereof signed by a Responsible Officer of Lessee
certifying that no such action is necessary to maintain the
perfection of such title and/or interest and security interest.
(ii) During such times that the Aircraft is registered under any Laws
other than the Federal Aviation Act, Lessee shall furnish to Lessor and to
Indenture Trustee annually (but in any case, (X) prior to the expiration of the
time period covered by any opinion of counsel rendered pursuant to Section
11(C) of the Refunding Agreement and any opinion of counsel rendered pursuant
to this Section 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
Lessor's title to and/or interest in and Indenture Trustee's security interest
in the Aircraft and the Operative Documents for such period of time as reflects
the then-current applicable Law, reciting the details of such actions.
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(l) Letter of Credit. As security for the obligations to Lessor,
Lessee shall provide to Lessor, as named beneficiary thereof, one or more
irrevocable standby letters of credit, in form and substance acceptable to
Lessor in its sole and absolute discretion (the "Letter of Credit"), including,
without limitation, as to renewal provisions, with a face amount available for
drawdown at all times equal to the amount set forth on Exhibit C (the "Face
Amount"), which Letter of Credit shall:
(i) provide that the full amount thereof shall be available for
drawdown thereunder and payable in New York, New York, on demand at any time,
if a Default under Section 17(e), (f) or (g) or an Event of Default has
occurred, which amount may be applied, retained or utilized as provided in the
penultimate paragraph of this Section 8(l);
(ii) be maintained in full force and effect at all times until
ninety-one (91) days after the Expiration Date with a commercial bank
acceptable to Lessor, in its sole and absolute discretion, having a long-term
unsecured debt rating of "A" or better by Standard & Poor's Rating Group (if
the issuing bank's credit rating is lower than such rating, Lessee shall
replace such Letter of Credit issuer within five Business Days of any such
reduction in rating with a commercial bank meeting such rating requirement),
provided, that the Letter of Credit set forth in Exhibit D-2 issued by The
Industrial Bank of Japan, Limited, will be acceptable to Lessor for so long as
The Industrial Bank of Japan, Limited maintains a long term unsecured debt
rating at least equal to its rating on the date hereof;
(iii) be expressly designated as transferrable and assignable; and
(iv) permit partial drawings. If the Letter of Credit is still
in effect at the end of the Term, or the Lessor is holding proceeds of the
Letter of Credit that were retained and not applied as provided herein, then
Lessor shall return the Letter of Credit to Lessee or terminate it, and/or
return any retained and unapplied proceeds, ninety-one (91) days following the
date of such expiration or other termination of this Lease so long as no
Default or Event of Default has occurred or is continuing hereunder or under
any Other Lease, upon payment in full of all amounts then due and owing to
Owner Trustee and Owner Participant under the Operative Documents.
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If an Event of Default has occurred or is continuing under this Lease
or an Event of Default has occurred or is continuing under any Other Lease (as
therein defined), in addition to any other rights and remedies Lessor may have
hereunder, under any Other Lease, any sublease and any and all other remedies
available at Law (including, without limitation, the Uniform Commercial Code as
adopted in New York) or equity and upon exercising its rights under the Letter
of Credit and any Other Letters of Credit, Lessor shall be entitled, in each
case as it may elect in its sole and absolute discretion, to (i) hold any
amounts drawn under the Letter of Credit or Other Letters of Credit as security
for Lessee's obligations under this Lease or the Other Leases, (ii) retain any
amounts drawn under the Letter of Credit or Other Letters of Credit for its own
account and apply (including, without limitation, by way of set off against)
such drawn amounts as it may elect (it being understood that amounts not so
applied will be held as security for Lessee's obligations under this Lease and
the Other Leases) to remedy any breach by Lessee of this Lease or any other
Operative Documents or Other Leases or (iii) recompense Lessor, Owner
Participant or any of their respective Affiliates for any loss, damage, cost or
expense or other Claim due or owing hereunder or under the Other Leases;
provided, however, that in the case of any drawing in respect of any claim for
the payment of Rent, Lessee's right to apply the same to such claim shall be
limited to amounts which would (absent such Event of Default) be distributable
under the Indenture at the time such payment is made to Lessor, Owner
Participant or any of their respective Affiliates (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity or to the
Note Holders); provided further, however, that neither the amount so applied at
any one time nor the aggregate amount so applied at different times shall
reduce the amount of any installment or payment of Rent (whether upon the
termination of the Lease or otherwise) payable by Lessee to an amount
insufficient to pay in full the amounts required to be paid on account of the
principal of and any interest on the Equipment Notes or otherwise owing to a
Note Holder. Lessee shall not be entitled to any refund or credit with respect
to any amounts so applied. Any amount retained shall be considered the
property of Lessor and Lessor may commingle such amount with its general funds
and Lessee, further, hereby absolutely and irrevocably disclaims, to the
maximum extent permitted by applicable Law, any interest therein. Lessee shall
not be entitled to any interest or other earnings on such retained amount and
such amount shall not be refundable.
On application of all or any portion of the amounts drawn under the
Letter of Credit or any Other
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Letters of Credit in accordance with this Section 8(l) or the Other Leases,
Lessee shall on demand reinstate the amount of the Letter of Credit or Other
Letters of Credit, as the case may be, to its or their full Face Amount or
provide to Lessor one or more additional Letters of Credit meeting the
requirements of this Section 8(l), so that the Letter of Credit and each of the
Other Letters of Credit at all times equals the original Face Amount provided
for herein. During such times as Lessor shall elect to hold all or part of the
proceeds of the Letter of Credit or Other Letters of Credit as security for
Lessee's obligations to Lessor under the Lease and the Other Leases, Lessee
shall not be obligated to reinstate the amount of the Letter of Credit or
Letters of Credit, as the case may be, in respect of the proceeds so held.
Section 9. Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Lessee, at its own cost and expense, will
promptly replace, or cause to be replaced, all Parts which may from time to
time become worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use for any reason whatsoever.
In addition, in the ordinary course of maintenance, service, repair, overhaul
or testing, Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may at its own cost and expense remove any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair
or permanently rendered unfit for use, provided that Lessee (or, if a Permitted
Sublease is in effect, a Permitted Sublessee) shall replace at its own cost and
expense such Parts as promptly as possible. All replacement Parts shall be
free and clear of all Liens (except for pooling arrangements to the extent
permitted by paragraph (c) of this Section and Permitted Liens), be in at least
the equivalent or better modification status and service bulletin
accomplishment status, be fully interchangeable as to form, fit and function
and shall be in as good operating condition as, and have a value, remaining
useful life and utility at least equal to, the Parts replaced (assuming such
replaced parts were in the condition and repair in which they were required to
be maintained by the terms hereof).
All Parts which are at any time removed from the Aircraft shall remain
the property of Lessor, subject to the 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
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Parts specified above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to the Aircraft as above provided, or
as provided in Section 9(c), without further act, (i) title to the removed Part
shall thereupon vest in Lessee free and clear of all rights of Lessor,
Indenture Trustee, Owner Participant and Note Holders and shall no longer be
deemed a Part hereunder, (ii) title to such replacement Part shall thereupon
vest in Lessor and become subject to the Lien of the Indenture if it has not
been discharged, and (iii) such replacement Part shall become subject to the
Lien of the Indenture (if it has not been discharged) and this Lease and be
deemed a Part for all purposes hereof to the same extent as the Part which it
has replaced.
(b) Alterations, Modifications and Additions. Lessee, at its own cost
and expense, shall make or cause to be made such alterations and modifications
in and additions to the Airframe and each Engine to the extent made mandatory
for Lessee (or a sublessee) in respect of the Aircraft, Engines or Parts from
time to time to meet the applicable standards of the FAA or under any Law of
any Governmental Entity having jurisdiction or issued by the manufacturer of
the Airframe, Engines or Parts. In addition, so long as no Default or Event of
Default has occurred and is continuing, Lessee (or, if a Permitted Sublease is
in effect, a Permitted Sublessee), at its own expense, may from time to time
make such alterations and modifications in and additions to the Airframe and
either Engine as Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) may deem desirable in the proper conduct of its business, provided,
no such alteration, modification or addition diminishes the value, remaining
useful life or utility, or impairs the condition or airworthiness, of the
Airframe, either Engine or any Part below that immediately prior to such
alteration, modification or addition assuming that the Airframe, Engines and
Parts were then of the value, utility and remaining useful life and in the
condition and airworthiness required by the terms of this Lease. Except as
otherwise provided herein, title to all Parts incorporated or installed in or
attached or added to the Aircraft as the result of such alteration,
modification or addition, shall immediately vest in Lessor and become subject
to the Lien of the Indenture (if it has not been 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
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addition to, and not in replacement or substitution for, any Part originally
incorporated or installed in or attached to, or delivered with, the Aircraft on
the Delivery Date or any Part in replacement of, or substitution for, any such
originally incorporated, installed, attached or delivered Part, (ii) such Part
is not required to be incorporated or installed in or attached or added to the
Aircraft pursuant to the terms of Section 6 or this Section 9 or to maintain
the insurance required by Section 12 and (iii) such Part can be removed from
the Aircraft without causing any material damage thereto and without
diminishing or impairing the value, utility, remaining useful life, condition
or airworthiness which the Aircraft would have had at such time had such
alteration, modification or addition not occurred. Upon the removal by Lessee
of any such Part as provided in the preceding sentence, title thereto shall,
without further act, vest in Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) and such Part shall no longer be deemed part of the
Aircraft (such a part is herein called a "Removable Part"). Any Part not
removed by Lessee as above provided prior to the return of the Aircraft to
Lessor hereunder, whether pursuant to Section 16, Section 18 or otherwise,
shall remain the property of Lessor.
If any Removable Part is (i) owned by any third party and leased to
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), (ii)
sold to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) subject to a conditional sale contract or other security interest or
(iii) leased to Lessee (or, if a Permitted Sublease is in effect, a Permitted
Sublessee) pursuant to a lease which is subject to a security interest in favor
of any third party, then Lessor will not acquire or claim, as against such
lessor, conditional vendor or secured party, any right, title or interest in
any such Removable Part as the result of such Removable Part being installed on
the Aircraft; provided, however, that (A) Lessor's inability to so acquire or
claim is subject to the express condition that such lessor, conditional vendor,
or secured party shall have agreed in writing (which agreement may be contained
in the lease, conditional sale agreement or security agreement) not 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
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unsightly area of the Aircraft as a result of such removal and make all other
repairs which are advisable and result from such removal.
In the event Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) replaces a Part which is not required to be replaced under
Section 9(a) or 9(b) hereof, Lessee (or, if a Permitted Sublease is in effect,
a Permitted Sublessee) may remove the replacement Part so long as it reinstalls
the original Part and such original Part is free and clear of all Liens, other
than Permitted Liens, is in at least the same modification status and service
bulletin accomplishment status, is fully interchangeable as to form, fit and
function, has been overhauled, repaired and inspected by an agency acceptable
to the FAA or other Governmental Entity having jurisdiction, and is in as good
operating condition as, and has a utility, remaining useful life and a value at
least equal to that of such Part when it was removed from the Aircraft.
Notwithstanding any other provision hereof, and without limiting the
foregoing, Lessee (or, if a Permitted Sublease is in effect, Permitted
Sublessee) may install in the Aircraft audio visual, entertainment or
telephonic equipment (including seats with such equipment installed therein)
(any or all of which are hereafter referred to as "Excluded Property") in the
ordinary course of business, and Lessor shall not claim or acquire title
thereto and the rights of the owners thereof therein shall not constitute a
default hereunder; provided that (i) any such Excluded Property shall be
removed prior to the date of a Return Occasion without causing any damage to
the Aircraft and without diminishing or impairing the value, utility, remaining
useful life or condition which the Aircraft would have had at such time had
such Excluded Property not been installed, (ii) any equipment or seats which
such Excluded Property replaces shall be properly stored with the interests of
Lessor and, if the Lien of the Indenture is in effect, the Indenture Trustee,
duly noted thereon and acknowledged by any applicable bailee or warehouse, and
properly reinstalled on the Aircraft prior to the date of a 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
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no Default or Event of Default shall have occurred and be continuing or would
result therefrom be subjected by Lessee (or, if a Permitted Sublease is in
effect, a Permitted Sublessee) to a normal pooling arrangement customary in the
airline industry of which Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) is a part entered into in the ordinary course of Lessee's
or such Permitted Sublessee's business, provided the Part replacing such
removed Part shall be incorporated or installed in or attached to the Aircraft
in accordance with Section 9(a) as promptly as possible, and in any event
within sixty (60) days, after the removal of such removed Part. In addition,
any Replacement Part when incorporated or installed in or attached to the
Airframe or any Engine in accordance with Section 9(a) may be owned by another
Person subject to such a normal pooling agreement; provided, however, that
Lessee (or, if a Permitted Sublease is in effect, a Permitted Sublessee), at
its own expense, as promptly thereafter as possible, and in any event within
sixty (60) days, either (i) causes title to such replacement Part to vest with
Lessor in accordance with Section 9(a) (and to be subjected to the Lien of the
Indenture if it has not been discharged) by Lessee (or, if a Permitted Sublease
is in effect, a Permitted Sublessee) acquiring title thereto for the benefit of
and transferring title to Lessor free and clear of all Liens except Permitted
Liens, whereupon such replacement Part shall become subject to this Lease and
the Lien of the Indenture (if in effect) without the necessity for any further
act, document or notice, or (ii) replaces such replacement Part by
incorporating or installing in or attaching to the Aircraft a further
replacement Part owned by Lessee (or, if a Permitted Sublease is in effect, a
Permitted Sublessee) free and clear of all Liens other than Permitted Liens and
by causing title to such further replacement Part to vest in Lessor as above
provided and to 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 Indemnification.
(a) Indemnity. Lessee agrees that each payment of Basic Rent
hereunder shall be free and clear of, and without deduction for, any and all
withholdings on account of Taxes of any nature whatsoever, whether or not an
exclusion pursuant to Section 10(b) applies, except as required by law. If any
such deduction or withholding of Taxes is required with respect to such
payments of Basic Rent, Lessee shall pay an additional amount of Basic Rent
such that the net amount actually received by Lessor, after
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such deduction or withholding, will be equal to all such amounts that would be
received by Lessor if no such deduction or withholding had been required, but
only to the extent necessary to ensure that the holders of the outstanding
Equipment Notes receive such amount as may be required by the Indenture. If
Lessee pays any amount to Lessor (or to any taxing authority for the account of
Lessor) as a result of the application of the preceding sentence with respect
to any withholding Tax which is an excluded tax in respect of Lessor pursuant
to Section 10(b), then Lessor (or, in the case of Taxes imposed on the Owner
Trustee, the Owner Participant to the extent such Tax would give rise to a
Lessor's Lien for which the Owner Participant would be liable) shall reimburse
Lessee for such withholding Tax within 30 days of written notice accompanied by
evidence of payment for such withholding Taxes (exclusive of interest,
penalties and additions to Tax) paid by Lessee provided that in any
circumstance in which the Lessor is required to reimburse the Lessee for any
such withholding Taxes and the Lessee has not received such reimbursement from
Lessor or the Owner Participant, then to the extent of such shortfall and so
long as no Lease Event of Default has occurred and is continuing, Lessee shall
be entitled to obtain reimbursement from Lessor by reducing the succeeding
payments of Rent payable to Lessor (other than any portion of Rent that may be
required by the Indenture to be paid to the holders of any outstanding
Equipment Notes issued thereunder) until the aggregate amount of reduction is
equal to the sum of the amount of such shortfall and interest on that amount at
the Interest Rate from the date reimbursement is required to be made until the
date of such reduction in Rent. Except as provided in Section 10(b), and
taking into account any payments received by Lessor pursuant to the second
sentence of this Section 10(a), Lessee agrees to pay, and to indemnify and hold
each Indemnitee harmless from, any and all taxes (including, without
limitation, sales, personal property, transfer, fuel, leasing, use,
registration, occupational, license, value added, excess profits, excise, gross
receipts, franchise, stamp, income and minimum taxes), levies, withholdings,
assessments or other taxes, duties or charges of any nature, together with any
fines, penalties, charges or interest thereon (collectively, "Taxes"),
howsoever levied or imposed, whether levied or imposed upon or with respect to
or asserted against any Indemnitee, Lessee, the Aircraft, the Airframe, any
Engine or any Part thereof or interest therein, or otherwise, with respect to
any period beginning, or events or circumstances occurring, on or after the
Restatement Date, by any Federal, state or local government or taxing authority
in the United States of America or by any foreign government or any taxing
authority or governmental subdivision of a foreign country or of a
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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, 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; (C) the rentals, receipts, income or earnings arising therefrom
(including without limitation the Rent) or (D) interest, principal and
other amounts paid or payable with respect to the Equipment Notes, or
(ii) upon or with respect to the Operative Documents (including the
Equipment Notes), any interest in any thereof, or any future amendment,
supplement, waiver or consent thereto requested by Lessee with respect to
any thereof, or the execution, delivery, or performance of any thereof, or
the acquisition or subsequent transfer thereof or the issuance of the
Equipment Notes or any other document executed and delivered in connection
with the consummation or confirmation of the transactions contemplated by
the Operative Documents or any Indemnitee's interest in any of the
foregoing, or the execution, amendment, supplement, issuance, reissuance,
refinancing or delivery of any of the foregoing, or
(iii) the Trust Indenture Estate or the property, or the income or
other proceeds received with respect to the property, held by the Indenture
Trustee under the Indenture, or
(iv) the payment of the principal of, or interest or premium on, or
other amounts payable with respect to the Equipment Notes, whether as
originally issued or pursuant to any refinancing, modification or
reissuance or any other obligation evidencing any new loan, or
(v) otherwise with respect to or in connection with the transactions
contemplated by the Operative Documents.
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(b) Exclusions. The following Taxes shall not be subject to
indemnification under subsection (a) of this Section 10:
(i) In the case of any Indemnitee, any Taxes imposed 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
item of tax preference) imposed by the Federal government of the United
States of America (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 or
property Taxes),
(ii) In the case of any Indemnitee, Taxes imposed on, based on, or
measured by the 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 included in the calculation of an after-tax payment,
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 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 sale, transfer of title, transfer or other disposition by
such Indemnitee or a related Indemnitee (for such purpose, Owner Trustee,
Owner Participant and the general partners of 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
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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 other than a disposition attributable to the exercise of default
remedies under the Lease, or in the case of a default caused by the acts or
omissions of Lessee, any sublessee, assignee, or successor of Lessee or
person in possession of the Aircraft, default remedies under the Indenture,
(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) In the case of an Indemnitee other than the Indenture Trustee
or the Trust Indenture Estate, Taxes which arise out of or are caused by
(i) any breach of an obligation required by the Operative Documents or
material misrepresentation of such Indemnitee, or (ii) a failure by such
Indemnitee to fulfill its contest obligations, provided such failure
adversely affects such Indemnitee's ability to contest, and, in the case of
the Indenture Trustee or the Trust Indenture Estate, Taxes imposed as a
result of a breach of such Indemnitee's representations, warranties or
covenants contained in Section 9(a), 12, or 16 of the Refunding Agreement
in any material respect, or from a failure by such Indemnitee to fulfill
its contest obligations,
(viii) So long as no Event of Default shall have occurred and be
continuing, Taxes attributable to the Aircraft related to acts or events
occurring after the later of the termination of the Lease and the
redelivery of the Aircraft,
(ix) In the case of each Pass-Through Trust, each Pass-Through
Trustee (in its individual capacity and as trustee under the Pass-Through
Trusts), the
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Subordination Agent and each Liquidity Provider, United States withholding
taxes imposed as a result of the place of organization or other status of a
holder of an interest in a Pass-Through Trust,
(x) In the case of the Indenture Trustee, each Pass-Through Trust,
each Pass-Through Trustee (in its individual capacity), the Subordination
Agent and each Liquidity Provider, Taxes imposed with respect to the
Equipment Notes as a result of activities of such Indemnitee unrelated to
the transactions contemplated by the Operative Documents, and
(xi) In the case of a general partner of the Owner Participant, any
Taxes to the extent such Taxes when added to the Taxes of the same type
imposed on Owner Participant and all other general partners and which are
subject to indemnification, exceed the Taxes that would have been imposed
on Owner Participant alone had Owner Participant been a U.S. corporation
(it being understood that in the case of multiple general partners, the
Taxes subject to this exclusion shall be apportioned pro-rata in accordance
with each general partner's interest in the partnership.
For purposes of the exclusions provided in this Section (b), reference
to "such Indemnitee" shall mean, in the case of Owner Participant, Owner
Participant or any partner of Owner Participant, and, in the case of each
general partner of Owner Participant, Owner Participant or any other partner or
partners of Owner Participant.
Notwithstanding anything to the contrary contained in this Section 10
(other than Section 10(b)(xi)), the provisions of this Section 10(b) shall not
apply to, and Lessee shall hold each Indemnitee harmless against, and indemnify
each Indemnitee on an after-tax basis (as provided under Section 10(e)) for,
any Taxes imposed by any Taxing Authority, with respect to any period
beginning, or events or circumstances occurring, on or after the Restatement
Date in connection with or relating to the transactions undertaken pursuant to
the Foreign 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 Foreign Financing Documents) including, without
limitation, Taxes based on or measured by gross or net income or receipts,
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 Foreign Lessor by any Indemnitee pursuant to the Foreign
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 by reason of the terms and conditions of the Operative
Documents or the exercise of any rights specifically granted thereunder.
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(c) Covered Income Tax. For purposes of subsection (b)(i) and (b)(ii)
of this Section 10, a Covered Income Tax means
(i) in the case of any Indemnitee other than 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 (other than taxes which are in the nature of sales or
use taxes, license taxes or property taxes) imposed on an Indemnitee by any
state or local Taxing Authority in whose jurisdiction such Indemnitee did
not otherwise have sufficient business activities or business presence to
be subject to tax solely as a result of (x) the operation of the Aircraft
in such jurisdiction or (y) the transactions contemplated by the Operative
Documents, to the extent such taxes are directly attributable to such
operation of the Aircraft or to such transactions. For purposes of
determining whether or not the Indemnitee engaged in business, maintained
an office or other place of business or was otherwise located in the
jurisdiction of a Taxing Authority, Indemnitee shall be defined as
including all entities with which such Indemnitee is combined, integrated
or consolidated in such Taxing Authority's jurisdiction;
(ii) in the case of any Indemnitee other than 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 (other than taxes which are in the nature of sales or
use taxes, license taxes, or property taxes) imposed on such Indemnitee by
any foreign jurisdiction (i) 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 Operative Documents or (ii) which are
withholding taxes on Basic Rent to the extent such withholding taxes would
otherwise result in Basic Rent payments being insufficient to cover
principal and interest payments on the Equipment Notes;
(iii) 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
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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
(iv) in the case of the Indenture Trustee or the Trust Indenture
Estate, a tax imposed by any Taxing Authority other than the Federal
government of the United States of America based on, or measured by gross
income or receipts (including minimum taxes, withholding taxes, and taxes
on or measured by any item of tax preference), to the extent such Tax is
attributable to the operation 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, sublessee, or any Affiliate
of either thereof in such jurisdiction, including residence.
(d) Reports and Returns. In case any report or return is required to
be made by Lessee with respect to any Taxes which are subject to
indemnification by Lessee under this Section 10, Lessee will either make such
report or return in such manner as will show the ownership of the Aircraft in
Owner Trustee or the interest of Owner Participant or its permitted assigns and
send a copy of such report or return to 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.
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(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 (as determined, in
the case of the Owner Participant, on a hypothetical basis based on the
assumption that Owner Participant is subject to the highest federal corporate
income tax rate applicable in the year of payment and the State Rate (as
defined below). For this purpose, "State Rate" shall mean the actual state and
local tax rate imposed upon the Owner Participant, taking into account all
available allocations, apportionments, credits and deductions, such information
to be provided by the certification of a Responsible Officer of Owner
Participant (the "Certification"). At the request of the Lessee and at the
Lessee's expense, the accuracy of such information shall be verified by the
firm of certified public accountants regularly employed by the Owner
Participant, or any other national firm of independent certified public
accountants selected by Owner Participant and reasonably acceptable to Lessee.
The Certification as verified as described in the preceding sentence (if
requested by Lessee) shall be conclusive and binding on all parties. In no
event shall Owner Participant be required to make available or disclose any tax
returns or related information to any parties other than the certified public
accountants verifying the Certification.
(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 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 reduction calculated on
the same basis as the Gross-Up 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
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Section 13 hereof, net of any amount paid in respect of Taxes required to be
paid by such Indemnitee in respect of the receipt or accrual of such amounts
received by such Indemnitee from Lessee, less (y) the portion of all prior
payments computed pursuant to (A) above by such Indemnitee to Lessee hereunder.
(g) Payment. If a claim is made against any Indemnitee for any Taxes
which may be subject to indemnification by Lessee hereunder and if such
Indemnitee has notice thereof, such Indemnitee shall promptly notify Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations hereunder except to the extent Lessee's right to contest
such claim is precluded thereby. Any amount payable as an indemnity to any
Indemnitee or any amount payable to Lessee pursuant to this Section 10 is to be
paid to such party directly, in immediately available funds, within thirty (30)
days after receipt of a written demand therefor from such Indemnitee or Lessee,
as the case may be, except in the case of a payment to an Indemnitee to the
extent that such Taxes are being contested in good faith pursuant to this
Section 10, in which event the payment of such indemnity shall be made by the
due date for the payment of any Taxes that are the subject of such contest
taking into account all extensions of the due date that are available as a
result of the contest. In the event an Indemnitee makes a tax payment with
respect to any such Taxes (other than with funds advanced to such Indemnitee on
an interest-free basis by Lessee pursuant to this Section 10), Lessee shall
reimburse the amount of such payment and also shall pay to the Indemnitee
interest on the amount of such payment by such Indemnitee at the Interest Rate
from the date of any such payment by such Indemnitee to the date of such
reimbursement by Lessee to the Indemnitee hereunder. In the event an amount is
payable to Lessee under this Section 10 or Section 13, 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, shall in good faith
contest or shall permit Lessee, if desired by Lessee and, in the case of a
contest involving Owner Participant, permitted by Owner Participant, 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
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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 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) a threshold amount of $75,000 for any individual claim and
$150,000 for recurring claims is at issue,
(iii) 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 for the initial administrative or judicial contest and that the
Indemnitee is more likely than not to prevail in any appeal of a trial
court decision, and (b) agreed to pay Indemnitee for all reasonable costs
and expenses which Indemnitee may incur in contesting such claim,
(iv) there is no substantial risk of forfeiture of the Aircraft,
(v) if such contest is to be initiated by the payment of, and the
claiming of a refund for, such Taxes, Lessee shall advance or cause to be
advanced to such Indemnitee (if such Indemnitee is the Indenture Trustee or
the Trust Indenture Estate) 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,
(vi) no claim shall be appealed to the U.S. Supreme Court, and
(vii) Lessee shall have admitted its liability to indemnify Owner
Participant should a proposed adjustment prove to be correct, provided that
such admission may be conditioned on a binding judicial or administrative
adjudication of Lessee's responsibility to indemnify Owner Participant, and
provided further that in no event will such adjudication cause Lessee to
delay in fulfilling its contest obligations.
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(i) Refund. If any Indemnitee shall obtain a refund of all or any
part of any Taxes paid by Lessee or from an advance by Lessee, such Indemnitee
shall pay Lessee the amount of such refund together with any interest paid
thereon attributable to the Taxes paid or advanced by Lessee less the amount of
any Taxes payable by such Indemnitee in respect of the receipt of such refund
and interest after giving credit to Lessee for any savings by such Indemnitee
in respect to any such Taxes by reason of deductions, credits, allocations or
allowances in respect of the payment of any such Taxes; provided that such
amount shall not be payable before such time as Lessee shall have made all
payments or indemnities then due to the Lessor and the Indemnitee under the
Lease and all other Operative Documents, and provided further that no amount
shall be payable during any period in which an Event of Default under the Lease
has occurred and is continuing unremedied unless this Lease has terminated and
Lessee has paid all amounts due the Lessor thereunder.
(j) Diligence. Lessee shall not be deemed to be in default under any
of the above indemnification provisions of this Section 10 so long as Lessee or
the Indemnitee shall diligently prosecute such contest in accordance with the
provisions of this Section 10. Notwithstanding the foregoing, if a claim is
made against any Indemnitee for any Taxes which, if successful, would result in
the imposition of Taxes under circumstances which would require Lessee to
indemnify such Indemnitee, the Indemnitee shall be released from its
responsibility to contest such claim, or part thereof, if it agrees in writing
not to seek indemnification from Lessee in respect of the claim, or such part
thereof to be contested. In the event an Indemnitee fails to contest, or
refuses to permit Lessee to contest, a claim or part thereof which the
Indemnitee has the obligation to contest or to permit Lessee to contest under
this Section 10, then Lessee shall not be obligated to indemnify the Indemnitee
for such claim or such part thereof.
(k) Affiliated Group. In the event that the Indemnitee is a member of
an affiliated group (within the meaning of Section 1504(a) of the Code) which
files a consolidated Federal income tax return, the term "Indemnitee" shall
mean and include such affiliated group.
(l) Survival. The provisions of this Section 10 shall survive the
expiration or termination of any of the Operative Documents.
Section 11. Loss, Damage and Requisition.
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(a) Event of Loss with Respect to the Airframe. Subject to the other
provisions of this Section 11, upon an Event of Loss with respect to the
Airframe or the Airframe and any Engines then installed thereon, Lessee shall
forthwith (and, in any event, within five (5) Business Days after such
occurrence) give Lessor written notice of such occurrence and within thirty
(30) days after such occurrence give Lessor written notice of its election,
subject to the terms hereof and of the Indenture, to perform one of the
following two options (it being agreed that if Lessee shall not have given
Lessor notice of such election within thirty (30) days after such occurrence,
Lessee shall be deemed to have elected to perform the option set forth in the
following clause (ii)), provided, that Lessee shall not have the right to
select the option set forth in clause (i) if a Default or an Event of Default
shall have occurred and be continuing at the time of such election or at the
time of replacement:
(i) Within one hundred twenty (120) days (the "Replacement
Period") after the date of the Event of Loss (but in no event later than the
last day of the Term) Lessee shall convey, or cause to be conveyed to Lessor as
provided in Section 11(c) hereof, to be subjected to the Lien of the Indenture
if it has not been discharged, and to be leased by Lessee hereunder in
replacement of the Airframe and such Engines then installed thereon, title to a
replacement Airframe (together with the same number of replacement Engines as
the Engines), such replacement Airframe and Engines (A) to be free and clear of
all Liens (it being understood that, upon such conveyance, such replacement
Airframe and replacement Engines may be subject to Permitted Liens), (B) to
have a value, utility and remaining useful life, determined in accordance with
the Appraisal Procedure as provided in Section 11(c) hereof, at least equal to,
and to be in at least as good operating condition as, the Airframe and the
Engines, if any, so replaced (assuming the Airframe and the Engines were
maintained in accordance with the requirements of this Agreement, whether or
not they are in fact so maintained), and (C) to be a like Airbus A320-231 model
aircraft with equivalent or better modification status delivered by the
Manufacturer not earlier than June 30, 1988 and, in the case of Engines, in
compliance with Section 11(b); provided that if Lessee shall not perform its
obligation to effect such replacement under this clause by the end of the
Replacement Period, Lessee shall then be deemed to have elected to 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
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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 Liens), all of Lessor's
right, title and interest, if any, in and to the Airframe and the Engines
suffering the Event of Loss as well as all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft and replaced as
provided above but not installed thereon at the time of the Event of Loss. For
all purposes hereof, a replacement Airframe shall be deemed part of the
property leased hereunder and shall be deemed the "Airframe" as defined herein.
No Event of Loss resulting in replacement of the Airframe or Engines under this
Section 11(a)(i) shall result in any reduction of Rent.
(ii) On a Stipulated Loss Value Date on or before one hundred
twenty (120) days after the date of the Event of Loss (or, if earlier, with
respect to insurance proceeds, on the date on which insurance proceeds with
respect to the Event of Loss are received by the loss payee) Lessee shall pay
to Lessor in immediately available funds the sum of (A) the Stipulated Loss
Value of the Aircraft as shown on Exhibit A for such Stipulated Loss Value
Date, plus all Basic Rent or Renewal Rent, as the case may be, payable on each
Basic Rent Payment Date or Renewal Rent Payment Date, respectively, prior to
the date of payment of such Stipulated Loss Value which has not been paid when
due, [plus, if such Stipulated Loss Value Date is also a Basic Rent Payment
Date or a Renewal Rent Payment Date, the amount of Basic Rent or Renewal Rent,
as the case may be, payable by Lessee on such Stipulated Loss Value Date, or,
if such Stipulated Loss Value Date occurs after the last day of the Term,] plus
an amount equal to the average daily Basic Rent or Renewal Rent, as the case
may be, in effect on the last day of the Term, for each day from and including
the last day of the Term to and excluding such Stipulated Loss Value Date, and
(B) all Supplemental Rent payable, whereupon (1) the obligation of Lessee to
pay Basic Rent or Renewal Rent, as the case may be, hereunder with respect to
the Aircraft for any period commencing after the date on which such Stipulated
Loss Value is paid shall terminate; provided that Lessee shall remain liable
for, and shall pay on or before the date the Stipulated Loss Value and
Supplemental Rent are 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
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Airframe and Engines are free and clear of Lessor's Liens), all of Lessor's
right, title and interest, if any, in and to the Airframe and Engines suffering
the Event of Loss, as well as all of Lessor's right, title and interest, if
any, in and to any Engine constituting part of the Aircraft but not installed
thereon at the time of the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon an Event of Loss
with respect to an Engine only, Lessee shall give Lessor prompt written notice
thereof and shall, at its own cost and expense, within sixty (60) days after
such occurrence convey or cause to be conveyed to Lessor as replacement for the
Engine suffering an Event of Loss, title to another IAE Model V2500 engine of
like model and equivalent or better modification status or, at Lessee's option,
an IAE engine of an improved model, in each such case which has a value,
remaining useful life and utility determined in accordance with the Appraisal
Procedure at least equal to such Engine and is suitable for installation and
use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, free of all Liens (it being understood that, upon
such conveyance, such replacement Engine may be subject to Permitted Liens) and
being in as good operating condition as (including no greater number of cycles
or hours than) the Engine being replaced assuming the Engine being replaced was
serviceable and otherwise in the condition and repair required by the terms
hereof immediately prior to the Event of Loss. Prior to or at the time of any
such conveyance, Lessee, at its own cost and expense, will (i) furnish Lessor
with a full warranty bill of sale, in form and substance reasonably
satisfactory to Owner Participant and Indenture Trustee, as applicable, with
respect to such replacement Engine; (ii) cause supplements, in form and
substance reasonably satisfactory to Owner Participant and Indenture Trustee
(if the Lien of the Indenture has not been discharged), subjecting such
replacement Engine to this Lease, the Indenture (if 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 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
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Permitted Liens), and is duly leased hereunder and subject to the Lien of the
Indenture (if it has not been discharged), the instruments subjecting such
Replacement Engine to the Lien of the Indenture and the Lease, and subjecting
to any relevant Assigned Sublease and Sublease Agreement, as the case may be,
have been duly filed for recordation pursuant to the Federal Aviation Act or
any other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary in order to
establish and perfect, in the United States and, if the Aircraft is registered
outside the United States, in the jurisdiction of registration, the legal title
to such Replacement Engine and the Lien of the Indenture on such Replacement
Engine; (v) furnish a certificate signed by a Responsible Officer of Lessee
certifying that, upon consummation of such replacement, no Default or Event of
Default will exist hereunder; (vi) furnish such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(b), the taking of all corporate
proceedings in connection therewith and compliance with the conditions set
forth in this Section 11(b), in each case in form and substance satisfactory to
such party; (vii) furnish such Uniform Commercial Code financing statements
covering the Replacement Engine as may be requested by Lessor or Indenture
Trustee (if the Lien of the Indentures has not been discharged); (viii) furnish
Owner Participant with an opinion of tax counsel mutually satisfactory to Owner
Participant and Lessee and which opinion is reasonably satisfactory to Owner
Participant to the effect that such replacement will have no adverse tax
consequences to Lessor and Owner Participant; (ix) furnish the appraisal
referred to above; and (x) furnish Owner Trustee and Indenture Trustee with the
opinion of counsel to Lessee specified in Section 5.06(a)(5)(i) of the
Indenture. Upon full compliance by Lessee with the terms of this Section
11(b), 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.
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(c) Conveyance of Replacement Airframe. Prior to or at the time of
any conveyance of a replacement Airframe pursuant to Section 11(a) above,
Lessee, at its own cost and expense, will furnish Lessor with the following
documents which shall have been duly authorized, executed and delivered by the
respective parties thereto and shall be in full force and effect on said date:
(i) a full warranty bill of sale, in form and substance satisfactory to Owner
Participant and Indenture Trustee (if the Lien of the Indenture has not been
discharged), and an AC Form 8050-2 Bill of Sale (or such other form of bill of
sale as may be approved by the FAA on said date), executed by the owner
thereof, in favor of Lessor and cause supplements, reasonably satisfactory to
Owner Participant and Indenture Trustee (if the Lien of the Indenture has not
been discharged), to this Lease, the Indenture (if then in effect) and the
Trust Agreement (if then in effect), with respect to such replacement Airframe
and to be duly filed for recordation pursuant to the Federal Aviation Act or
other applicable Governmental Entity; (ii) the certificate specified in Section
12(f) hereof demonstrating compliance with the insurance requirements of
Section 12 with respect to the replacement Airframe and Engines; (iii) an
opinion (addressed to Indenture Trustee, Lessor, and Owner Participant) of
Lessee's counsel (and such other evidence of title as Owner Participant or
Indenture Trustee (if the Lien of the Indenture has not been discharged) may
reasonably request) to the effect that, upon such conveyance, Lessor will
acquire good title to such replacement Airframe free and clear of all Liens (it
being understood that, upon such conveyance, such replacement Airframe may be
subject to Permitted Liens), that such replacement Airframe will be leased
hereunder to the same extent as the Airframe replaced thereby and will be
subject to the Lien of the Indenture (if it has not been discharged), the
instruments subjecting such Replacement Airframe and Replacement Engine to the
Lien of the Indenture and the Lease, and subjecting to any relevant Assigned
Sublease and Sublease Assignment, as the case may be, have been duly filed for
recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing
or recording of any document is necessary in order to establish and perfect, in
the United States and, if the Aircraft is registered outside the United States,
in the jurisdiction of registration, the legal title to such Replacement
Airframe and Replacement Engine and the Lien of the Indenture on such
Replacement Airframe and Replacement Engine, and that Lessor, and Indenture
Trustee as assignee of Lessor, is entitled to the benefits of Section 1110 of
Title 11 of the United States Code with respect to such replacement airframe
and engines to the same extent as with respect to the Airframe and Engines then
installed thereon
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prior to such replacement; (iv) a certificate signed by a Responsible Officer
of Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (v) such documents and evidence with
respect to Lessee, Owner Participant or Indenture Trustee (if the Lien of the
Indenture has not been discharged), as such parties or their respective counsel
may reasonably request in order to establish the consummation of the
transactions contemplated by this Section 11(c), the taking of all corporate
proceedings in connection therewith and compliance with the conditions set
forth in this Section 11(c), in each case in form and substance satisfactory to
each such party, including evidence that the Aircraft of which the replacement
Airframe is a part has been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of this Lease and application for
registration of such replacement Airframe in the name of Lessor has been duly
made with the FAA or other applicable Governmental Entity and Lessee has
temporary or permanent authority to operate the replacement Airframe; (vi)
furnish such Uniform Commercial Code financing statements covering the
replacement Airframe as may be reasonably requested by Lessor or Indenture
Trustee; (vii) furnish Owner Participant with an opinion of tax counsel
mutually satisfactory to Owner Participant and Lessee and which opinion is
reasonably satisfactory to Owner Participant to the effect that such
replacement will have no adverse tax consequences to Lessor and Owner
Participant; (viii) an appraisal prepared in accordance with the Appraisal
Procedure which confirms that the replacement Airframe and any replacement
Engine has a value, utility and remaining useful life at least equal to that of
the Airframe and Engines which suffered the Event of Loss assuming that the
same were maintained in accordance with the requirements of this Lease whether
or not they are in fact so maintained; and (ix) furnish Owner Trustee and
Indenture Trustee with the opinion of counsel to Lessee specified in Section
5.06(a)(5)(i) of the Indenture. Upon full compliance by Lessee with the terms
of this Section 11(c), Lessor will, subject to the rights of any insurers,
transfer to Lessee "AS IS, WHERE IS," without recourse, representation or
warranty (except a warranty that such Airframe is free and clear of Lessor's
Liens and Head Lessor Liens), all of Lessor's right, title and interest in and
to the Aircraft which suffered the Event of Loss. No Event of Loss with
respect to the Aircraft under the circumstances contemplated by the terms of
this Section 11(c) shall result in any reduction in Rent.
For all purposes of this Lease, each such replacement Aircraft
(together with any Engines constituting part of the Aircraft being replaced as
to which an Event of Loss has not occurred) shall be deemed part of the
property
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leased hereunder and shall be deemed the "Aircraft" as defined herein.
(d) Application of Proceeds and Payments. Any payments received at
any time by Lessor or by Lessee from any insurer (including a Governmental
Entity providing an indemnity in lieu thereof) with respect to an Event of Loss
shall be applied in the manner specified in Sections 12(c) and (e) hereof.
Subject to Section 11(f) below, any payments (other than insurance or such
indemnity proceeds) received at any time by Lessor or Lessee from any
Governmental Entity or other Person with respect to an Event of Loss will be
applied as follows (after reimbursement of Lessor, Indenture Trustee and Owner
Participant for their reasonable out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Lessor in reduction of Lessee's obligation to pay such Stipulated
Loss Value and other payments, if not already paid by Lessee, or, if already
paid by Lessee, shall (unless a Default or an Event of Default shall have
occurred and be continuing) be applied by Lessor to reimburse Lessee for its
payment of such Stipulated Loss Value and other payments and the balance, if
any, of such payment remaining thereafter shall be paid over to, or retained
by, Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid
over to, or retained by, Lessee if Lessee shall have fully performed or,
concurrently therewith fully performs, the terms of Sections 11(a)(i) and (c)
or Section 11(b) hereof, as the case may be, and of Section 15 hereof with
respect to the Event of Loss for which such payments are made and if no Default
or Event of Default shall have occurred and be continuing.
(e) Requisition for Use by Government with Respect to the Aircraft.
Subject to Section 11(f) below, in the event of the requisition for use by a
Governmental Entity of the Aircraft, the Airframe or an Engine (other than a
requisition constituting an Event of Loss), Lessee shall promptly notify Lessor
and Indenture Trustee (if the Lien of the Indenture has not been discharged)
thereof and all of Lessee's obligations under this Lease with respect to such
Airframe or Engine shall continue to the same extent as if such requisition had
not occurred. All payments received by Lessor or Lessee from the Governmental
Entity for the use
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of such Airframe or Engine during the Term shall be paid over to, or retained
by, Lessee if no Default or Event of Default shall have occurred and be
continuing; and all other payments received by Lessor or Lessee from the
Governmental Entity shall be paid over to, or retained by, Lessor. If the
Airframe and such Engines or engines are not returned by the end of the Term,
an Event of Loss shall be deemed to have occurred on the last day of the Term
and, on the last day of the Term, Lessee shall either pay to Lessor the amount
provided herein for an Event of Loss to the Airframe and such Engines or
engines on such date or provide a replacement Aircraft and Engine on such date
in the condition provided for in Section 16 and Exhibit E. In the event of the
requisition for use by the Governmental Entity of any Engine without the
requisition for use of the Airframe, Lessee will replace such Engine hereunder
by complying with the terms of Section 11(b) to the same extent as if an Event
of Loss had occurred with respect to such Engine, and thereafter any payments
received by Lessor or Lessee from the Governmental Entity with respect to such
requisition shall be paid over to, or retained by, Lessee.
(f) Application in Default. Any amount referred to in clause (i) or
(ii) of Section 11(d) or Section 11(e) which is otherwise payable to Lessee
shall not be paid to Lessee, or, if it has been previously paid to or retained
by Lessee, shall be paid by Lessee to Lessor, if at the time of such payment or
retention a Default or an Event of Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Indenture Trustee so long as the Lien of the Indenture shall not have been
discharged and thereafter by Lessor as security for the obligations of Lessee,
or, at the option of Lessor or the Indenture Trustee, as the case may be,
applied by Lessor or the Indenture Trustee, as the case may be, toward payment
of any of Lessee's obligations at the time due hereunder, as Lessor or the
Indenture Trustee, as the case may be, may elect, including, without
limitation, by reason of this Lease being declared or deemed in default. At
such time as there shall not be continuing any such Event of Default or
Default, all such amounts at the time held by Lessor or Indenture Trustee in
excess of the amount, if any, which Lessor or Indenture Trustee has elected for
application as provided above, shall be paid to Lessee.
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,
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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, the general partners of 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, the
general partners of 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, the general partners of 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, the general partners of 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, the general partners of 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, the general partners of 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
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the Aircraft is located or operated, and (v) shall provide that, as against
Lessor, Owner Participant, the general partners of 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, the
general partners of 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, the
general partners of 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,
the general partners of Owner Participant, Indenture Trustee and the other
Indemnitees than 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
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perils hull insurance reasonably acceptable to Lessor with Approved Insurers.
In addition, at least ten (10) Business Days (or, in the case of an emergency,
at least two (2) Business Days) prior to permitting the Aircraft, Airframe or
Engines to be operated or located outside of the United States of America,
other than in Canada or Mexico, Lessee shall notify Lessor thereof. If Owner
Participant or Indenture Trustee reasonably requests at any time and if such
insurance is then customarily being obtained by or for Persons leasing or
financing similarly-sized aircraft operating on similar routes to operators
located in the jurisdiction of Lessee's or, if a Permitted Sublease is in
effect, the Permitted Sublessee's jurisdiction of domicile, Lessee shall pay or
reimburse Lessor for political risk, repossession, expropriation, confiscation
and similar insurance as Lessor may arrange or cause to be arranged; provided
that Indenture Trustee shall not be obligated to request such insurance and
shall not be liable for any failure to request such insurance. Anything herein
to the contrary notwithstanding, at all times while the Aircraft is subject to
this Lease, the insurance required by this Section 12(b) shall be for an amount
on an "agreed value" basis not less than the Stipulated Loss Value from time to
time determined for the Aircraft. Without limiting the foregoing, the type and
amount of insurance carried by Lessee hereunder shall be no less comprehensive
or favorable to Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees than that carried by Lessee with respect to similar-size aircraft
owned or leased by Lessee.
Each and any policy of insurance obtained and maintained pursuant to
this Section 12(b), and each and any policy obtained in substitution or
replacement for any such policies, (i) shall designate Lessor as owner of the
Aircraft, shall designate, so long as the Lien of the Indenture has not been
discharged, Indenture Trustee and, thereafter, Lessor, as sole loss payee, as
provided below and shall designate Lessor, Owner Participant, Indenture Trustee
(in both its individual capacity and its trustee capacity) and the other
Indemnitees and their respective permitted assigns as additional insureds, as
their respective interests may appear (but without imposing upon Lessor, Owner
Participant, Indenture Trustee and the other Indemnitees 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,
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regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by the Lessee or another additional insured, (iii)
shall provide that if such insurance is cancelled for any reason whatsoever, or
is changed in any adverse way with respect to the interests of Lessor, Owner
Participant, Indenture Trustee and to the other Indemnitees and their
respective permitted assigns, or if such insurance is allowed to lapse, such
cancellation, change or lapse shall not be effective as to Lessor, Owner
Participant, Indenture Trustee, the other Indemnitees or their respective
permitted assigns, until thirty (30) days (seven (7) days or such lesser period
of time as is the insurance industry standard for war/allied perils coverage)
after written notice to Lessor, Owner Participant and Indenture Trustee from
such insurer or insurers, as the case may be, of such prospective cancellation,
change or lapse, (iv) shall include coverage for any country in or over which
the Aircraft may at any time be located or operated, (v) shall provide that, as
against Lessor, Owner Participant, Indenture Trustee the other Indemnitees and
their respective permitted assigns, each insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against Lessor, Owner Participant, Indenture Trustee and the other
Indemnitees and their respective permitted assigns, with respect to the
Aircraft, (vi) shall provide that in the event of any damage or loss which is
an Event of Loss hereunder and which results in a payment, such payment shall
be payable directly to Indenture Trustee as sole loss payee, so long as the
Lien of the Indenture shall not have been discharged and thereafter to Lessor,
as sole loss payee, and (vii) shall provide that in the event of any damage or
loss which is not an Event of Loss hereunder and which results in a payment,
such payment shall be payable directly to Indenture Trustee, as sole loss payee
for the account of all interests, so long as the Lien of the Indenture shall
not have been discharged and thereafter to Lessor, as sole loss payee for the
account of all interests. The insurance required under this Section 12(b) may
incorporate deductible amounts which shall not exceed one million dollars
($1,000,000).
Each of Lessor, Owner Participant and the general partners of 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, Owner Participant or the general partners of
Owner Participant with respect to the Aircraft. Lessee shall have
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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, Owner Participant or the general partners of Owner Participant. Lessee
shall give Lessor reasonable prior written notice of any insurance to be
carried by Lessee in addition to that required to be carried by Lessee as
provided herein.
In the event that separate policies are maintained to cover "all-risk"
ground and flight aircraft, hull and war risks and allied perils insurance,
Lessee shall include a 50/50 provisional claims settlement clause as contained
in the policies of insurance maintained by Lessee with respect to all other
aircraft in Lessee's fleet, and a copy of the 50/50 provisional claims
settlement clause in effect on the Restatement Date shall be attached to the
insurance certificate issued on the Restatement Date.
(c) Application of Insurance Proceeds for an Event of Loss. It is
agreed that insurance payments which arise from insurance required to be
carried by Lessee pursuant to this Section 12 and received as the result of the
occurrence of an Event of Loss shall be applied as follows (after reimbursement
of Lessor, Owner Participant and Indenture Trustee for their reasonable
out-of-pocket costs and expenses):
(i) unless clause (ii) below is applicable, so much of such
payments as shall not exceed the Stipulated Loss Value and other payments
required to be paid by Lessee pursuant to Section 11(a)(ii) of this Lease shall
be paid to Indenture Trustee so long as the Lien of the Indenture has not been
discharged and thereafter to Lessor in reduction of Lessee's obligation to pay
such Stipulated Loss Value and any other payments if not already paid by
Lessee, or, if already paid by Lessee, shall (unless a Default or an Event of
Default shall have occurred and be continuing) be applied by Indenture Trustee
or Lessor, as the case may be, to reimburse Lessee for its payment of such
Stipulated Loss Value and other payments and the balance, if any, of such
payment remaining thereafter shall be paid over to, or retained by, Lessor; or
(ii) if such payments are received as a result of an Event of
Loss with respect to the Airframe or an Engine which is being replaced pursuant
to Section 11(a)(i) or Section 11(b) hereof, all such payments shall be paid
over by the Indenture Trustee or Lessor, as the case may be, to, or retained
by, Lessee if Lessee shall have
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fully performed or, concurrently therewith fully performs, the terms of Section
11(a)(i) and (c) or Section 11(b) hereof, as the case may be, and of Section 15
hereof with respect to the Event of Loss for which such payments are made and
if no Default or Event of Default shall have occurred and be continuing.
(d) Application of Insurance Proceeds for Other than an Event of Loss.
The insurance payments of any property damage loss to the Airframe or any
Engine not constituting an Event of Loss with respect thereto will be applied
in payment for the actual costs of repairs or for replacement property which
Lessee has incurred in accordance with the terms of Section 9, 11 or 12(c) of
this Lease against such documentation evidencing payment by Lessee as Lessor
may reasonably request to reimburse Lessee for such repairs or replacements
already paid for by Lessee, and any balance remaining after compliance with
such Sections with respect to such loss shall be paid to Lessor. Lessee shall
be entitled to receive from the insurer any insurance proceeds not in excess of
five hundred thousand dollars ($500,000) as soon as such funds are paid and
shall promptly receive such additional insurance proceeds from the loss payee
upon invoices for repair work in progress, replacement parts which are ordered
or for work completed as provided above in this Section 12(d). Any amount
referred to in this Section 12(d) which is payable to Lessee shall not be paid
to Lessee if at the time of such payment any Default or Event of Default shall
have occurred and be continuing, but shall be held by Lessor as security for
the obligations of Lessee under this Lease or applied as provided in Section
12(e).
(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
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Default, all such amounts at the time held by Indenture Trustee or Lessor in
excess of the amount, if any, which Indenture Trustee or Lessor has elected for
application as provided above, shall be paid to Lessee.
(f) Certificates. On or before the Delivery Date, and thereafter on
any renewal by the Lessee of the insurance required hereby (but in no event
less than once in every twelve (12) month period), Lessee will furnish to
Lessor and Indenture Trustee a certificate executed and delivered by an
Approved Insurer or the Approved Broker, describing in reasonable detail, and
in accordance with customary practice, insurance carried on the Aircraft and
Lessee shall also furnish an opinion or report by the Approved Insurer or the
Approved Broker certifying that the insurance then maintained on the Aircraft
complies with the terms of this Lease. Lessee will cause the Approved Broker
to agree to advise Lessor, Owner Participant and Indenture Trustee in writing
at least thirty (30) days (seven (7) days or such lesser period of time as is
the insurance industry standard for war/allied perils coverage) prior to the
expiration, non-renewal, termination or cancellation for any reason (including,
without limitation, failure to pay premium therefor) or material modification
of any such insurance.
In the event Lessee shall fail to maintain insurance as herein
provided, Lessor, Owner Participant or Indenture Trustee at their respective
options, may provide such insurance and, in such event, Lessee shall, upon
demand, reimburse Lessor, as Supplemental Rent, or any other such other Person
who may have provided such insurance, for the cost thereof.
(g) Reinsurance. Lessee (or if a Permitted Sublease is in effect, the
Permitted Sublessee) may carry primary insurance outside of the aviation
insurance markets in New York, London or Paris if the relevant primary insurer
shall have obtained reinsurance and such reinsurance (i) is 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):
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"The Reinsurers and the Reinsured hereby mutually agree that in the event of
any claim arising under the reinsurances in respect of a total loss or other
claim where as provided by the Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-11] dated as of June __, 1997 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 a net after-tax basis, as provided in Section 10(e), within
fifteen (15) days after demand from and against any and all claims (whether or
not based on strict liability), damages (whether direct, indirect, incidental,
special or consequential), losses, charges, fees, liabilities, obligations,
demands, suits, judgments, actions and other legal proceedings (whether civil
or criminal), penalties, fines, other sanctions, and any reasonable costs and
expenses in connection herewith, including, without limitation, costs and
expenses set forth in Section 21(j) hereof and reasonable attorney's fees and
expenses of whatever kind or nature (any and all of which are hereafter
referred to as "Claims") imposed on, or asserted by or against, or suffered or
incurred by, any Indemnitee, from (and including) the Restatement Date,
including, without limitation, injury, death or property damage of passengers,
shippers and others, environmental control, noise and pollution regulations,
which in any way may result from, pertain to, or arise in any manner out of, or
are in any manner related to (1) the Operative Documents, the Purchase
Documents or the Financing Documents, or any of the transactions contemplated
thereby; (2) the Aircraft, the Airframe, any Engine or any engine used in
connection with the Airframe or any Part thereof, including, but not limited
to, (A) the importation, exportation, condition, manufacture, design, purchase,
ownership, registration, reregistration, deregistration (other than any
deregistration caused by the failure of the registered owner of the Aircraft to
be a "citizen of the United States" as defined under the Federal Aviation Act
and the regulations thereunder or to file the documentation necessary to
continue FAA registration of the Aircraft), delivery, nondelivery, assignment,
leasing, subleasing, sub-subleasing, acceptance, rejection, possession,
repossession, control, return, financing, Liens (excluding Lessor's Liens, Head
Lessor's Liens and Lenders' Liens, but including the Lien of the Indenture),
use, performance, modification, maintenance, overhaul, operation, pooling,
interchange, repair, testing, sale, return or other disposition or application
of the Aircraft, the Airframe, any Engine, any engine used in connection with
the Airframe or any Part (including, but not limited to, latent and other
defects whether or not discoverable by Lessee or Lessor,
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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 but excluding the Restatement Date (other
than Claims related to the condition, manufacture or design of the Aircraft)
and any Claim concerning payment for or the ownership of Buyer Furnished
Equipment, (v) an underlying act which occurs after the Aircraft has been
returned to Lessor in accordance with the terms hereof and the Term of this
Lease has been terminated or has expired and the return is not
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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 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
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engine used in connection with the Airframe or any Part thereof, either in the
air or on the ground, or which may be caused by any defect in such Aircraft,
Airframe, Engine, engine or Part from the material or any article used therein
or from the design or testing thereof, or use thereof or from any maintenance,
service, repair, overhaul, or testing of such Aircraft, Airframe, Engine,
engine or Part, claims for infringement, loss of or injury to any person, loss
of or damage to any property or environmental damage, regardless of when such
defect may be discovered, whether or not such Aircraft, Airframe, Engine,
engine or Part is at the time in the possession of Lessee, and regardless of
the location of such Aircraft at any such time except to the extent that such
Claim results from (i) the gross negligence or willful misconduct of such
Indemnitee (except any such gross negligence or willful misconduct as may be
attributed to an Indemnitee due to its interest in the Aircraft, the Airframe,
an Engine, any Operative Document, any Purchase Document or any Financing
Document), (ii) the material breach of any of its express representations,
warranties or covenants hereunder, under any other Operative Document or
Financing Document (not resulting from a breach by Lessee of any of its
representations, warranties or covenants in the Operative Documents or in the
Financing Documents), (iii) any Taxes, whether or not Lessee is required to
indemnify such Taxes under Section 10 hereof or the Tax Indemnification
Agreement (it being understood that Section 10 hereof and the Tax
Indemnification Agreement exclusively provide for Lessee's liability with
respect to Taxes), (iv) any Claim which relates solely to events which occurred
prior to but excluding the Restatement Date (other than Claims related to the
condition, manufacture or design of the Aircraft) and any Claim concerning
payment for or the ownership of Buyer Furnished Equipment, (v) an underlying
act which occurs after the Aircraft has been returned to Lessor in accordance
with the terms hereof and the Term of this Lease has been terminated or has
expired and the return is not related to an Event of Default, (vi) an
underlying act which occurs after a disposition or other transfer (voluntary or
involuntary) by such Indemnitee of all or any part of its interest in the
Aircraft, the Airframe, any Engine, or any Part, or in the Financing Documents,
the Purchase Documents or the Operative Documents (except as contemplated under
or pursuant to the Operative Documents, the Financing Documents or the Purchase
Documents and except as resulting from the exercise of its remedies during the
period while an Event of Default has occurred and is continuing and prior to
the time such Indemnitee has received payment of all amounts owing to it
hereunder and except any Claim which is alleged or does relate to the period
prior to such disposition), (vii) the authorization or giving or withholding of
any future amendments,
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supplements, waivers or consents with respect to any of the Financing
Documents, the Purchase Documents or the Operative Documents, which amendments,
supplements, waivers or consents were not requested by Lessee or are not
required to give effect to the provisions of the Operative Documents, the
Financing Documents or the Purchase Documents or (viii) a Lessor's Lien, a Head
Lessor's Lien or a Lenders' Lien attributable to such Indemnitee.
Each Indemnitee shall, at Lessee's sole cost and expense and with
Lessee's cooperation, be entitled to conduct the defense of any Claim against
it; provided, however, that Lessee shall, at the request of any Indemnitee and
so long as no Event of Default has occurred and is continuing, assume and
conduct promptly and diligently, at its sole cost and expense, the defense of
such Indemnitee against any Claim of a third party with counsel reasonably
acceptable to such Indemnitee; and provided, further, however, that Lessee
shall have the right as well as the obligation to assume such defense to the
extent required under the terms of the applicable insurance policies so long as
no Default or Event of Default has occurred and is continuing. In the event
Lessee shall so assume the defense of any Claim, such Indemnitee shall
cooperate with Lessee in defending such Claim, but any expenses incurred by
such Indemnitee in connection therewith shall either be paid by Lessee to such
Indemnitee in advance, or reasonable security shall be provided by Lessee to
such Indemnitee for such payments. Neither Lessee nor an Indemnitee shall
enter into a settlement or other compromise with respect to any Claim which
Lessee or such Indemnitee is defending hereunder in excess of $100,000 without
the prior written consent of the other, which consent shall not be unreasonably
withheld.
Each Indemnitee agrees to give Lessee prompt notice of any Claims by a
third party hereunder following such Indemnitee's actual knowledge of such
Claims by third parties, but the failure of such Indemnitee to give the notice
required by this Section 13 shall not constitute a release by Lessor or such
Indemnitee of, or reduce, any of the obligations or liabilities of Lessee to
such Indemnitee in respect of any such Claim or otherwise affect the
obligations or liabilities of Lessee to any Indemnitee in respect of any such
Claim, except to the extent that Lessee's ability to control the defense
thereof where Lessee has the right to control the defense thereof is materially
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
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necessary or advisable for the other to control the defense of a Claim to the
extent permitted by this Section.
Nothing in this Section shall be construed as a guaranty by Lessee of
payments due pursuant to any indebtedness incurred with respect to the purchase
of the Aircraft or of the residual value of the Aircraft.
Notwithstanding anything herein or in any other Operative Document to
the contrary, with respect to any Claim for which any Indemnitee is entitled to
indemnification under more than one provision of this Lease or any other
Operative Document, such Indemnitee shall be entitled to recovery for such
Claim only pursuant to one such provision as it may select in its sole
discretion (and, for the avoidance of doubt, such Indemnitee shall not be
entitled to any double recovery for the same Claim).
The indemnities contained in this Section 13 shall continue in full
force and effect notwithstanding the expiration or other termination of this
Lease or any of the other Operative Documents and are expressly made for the
benefit of and shall be enforceable by each Indemnitee.
Section 14. Liens.
Lessee shall not directly or indirectly create, incur, assume, or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part thereof, title thereto, or any interest of Lessor therein or
in this Lease, except (i) the respective rights of Lessor, Lessee, Owner
Participant, Indenture Trustee and any other Indemnitee as herein provided or
provided under the other Operative Documents or the Financing Documents; (ii)
Head Lessor's Liens, Lessor's Liens and Lenders' Liens; (iii) Liens for Taxes
either not yet due or being diligently contested in good faith by appropriate
proceedings in accordance with Section 10 and so long as adequate reserves are
maintained with respect to such Liens and only so long as neither such
proceedings nor such Liens involve any material danger of the sale, forfeiture
or loss of any of the Aircraft, the Airframe or any Engine or any Part, or any
interest of Lessor or Indenture Trustee therein or any risk of criminal
liability of Lessor or Indenture Trustee; (iv) 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
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therein; (v) the rights of other Persons to the extent expressly permitted by
the provisions of Section 6(a), 9(c) or 19; (vi) Liens arising out of any
judgment or award against Lessee (or any Permitted Sublessee) unless the
judgment or award shall not, within thirty (30) days after the entry thereof,
have been discharged, vacated, reversed, or execution thereof stayed pending
appeal or shall not have been discharged, vacated or reversed within thirty
(30) days after the expiration of such stay and only so long as such Liens
shall not involve any material danger of the sale, forfeiture or loss of any of
the Aircraft, the Airframe or any Engine or any Part, or any interest of Lessor
or Indenture Trustee therein and provided that the execution of such judgment
or award or an attachment relating thereto shall not have occurred within such
thirty (30) day period; and, (vii) any other Lien with respect to which Lessee
(or a Permitted Sublessee) shall have provided a bond adequate in the
reasonable opinion of Indenture Trustee (if the Lien of the Indenture has not
been discharged) and Owner Participant. Lessee shall promptly, at its own
expense, take or cause to be taken such action as may be necessary to duly
discharge any Lien (except for the Liens referred to in clauses (i) through
(vii) of this Section 14) directly or indirectly created, incurred, assumed, or
suffered to exist by Lessee if the same shall arise at any time.
Section 15. Protection of Title and Further Assurances.
Forthwith upon the execution and delivery of this Lease, the
Indenture, the Trust Agreement, Lease Supplement, Indenture Supplement and
Trust Supplement, and any other supplement from time to time required by the
terms hereof, Lessee will cause this Lease, the Indenture, the Trust Agreement,
Lease Supplement, Indenture Supplement, Trust Supplement and such other
supplements to be duly filed and recorded, and maintained of record, in
accordance with the applicable laws of the government of registry of the
Aircraft. If any filing or recording is reasonably necessary to protect the
interests of Lessor or Indenture Trustee, Lessee shall, at its own cost and
expense (except it shall be at Lessor's expense if in connection with a change
in ownership of the Aircraft or any other transfer or assignment by Lessor
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default) and upon request by Lessor, cause any
financing statements and any and all additional instruments and other
documents, so far as permitted by applicable Law, to be kept, filed, and
recorded and to be re-executed, refiled and re-recorded at all times in the
appropriate office pursuant or in relation to any applicable Laws of any
Governmental Entity, to protect and preserve the rights and interests of
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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 lessee may operate the Aircraft, as Lessor
may reasonably request. Lessee shall also do or cause to be done, at its own
expense (except it shall be at Lessor's expense if in connection with a change
in the ownership of the Aircraft or any other transfer or assignment by Lessor
other than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), any and all acts and things which may be
required under the terms of any other Law involving any jurisdiction in which
Lessee, any Permitted Sublessee or any wet lessee may operate the Aircraft,
which Lessor may reasonably request, to protect and preserve the title of the
Lessor, this Lease, the Indenture and Lessor's and Indenture Trustee's interest
in the Aircraft and under any of the Operative Documents or Financing Documents
within any such jurisdiction.
In addition, at Lessee's expense, Lessee will promptly and duly
execute and deliver to Lessor or Indenture Trustee, as applicable, such further
documents and assurances and take such further actions as Owner Participant or
Indenture Trustee may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and the other
Operative Documents and the Financing Documents and to protect the rights and
remedies created or intended to be created in favor of Lessor or Indenture
Trustee hereunder and the other Operative Documents and the Financing Documents
including, without limitation, if reasonably requested by Owner Participant or
Indenture Trustee, at the expense of Lessee (except it shall be at Lessor's
expense if in connection with a change in the ownership of the Aircraft or any
other transfer or assignment by Lessor or Indenture Trustee other
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than as contemplated hereunder or under the Financing Documents or in
connection with an Event of Default), the execution and delivery of supplements
or amendments hereto in recordable form, subjecting to this Lease, the
Indenture and the other Financing Documents, any replacement Aircraft or Engine
and the recording or filing of counterparts thereof in accordance with the laws
of any appropriate jurisdiction.
Section 16. Return of Aircraft and Records.
(a) Return. On any Return Occasion, Lessee, at its own expense and
risk, shall return the Aircraft to Lessor (or any Person designated by Lessor)
in at least the condition specified in this Section and Exhibit E hereto at any
Lessee system location in the continental United States selected by Lessor, or
such other location as Lessor and Lessee may agree, fully equipped with all
required Engines, or other engines owned by Lessee (which shall thereupon
become Engines as hereinafter provided) meeting the conditions specified in
this Section and Exhibit E, duly installed thereon by delivering the same to
the Lessor at such location. Lessee shall comply with Section 11(b) and this
Section 16 with respect to any engines installed on the Aircraft returned to
Lessor hereunder and meeting the conditions described herein which were not
originally installed on the Aircraft.
(b) Status Upon Return. Upon any Return Occasion hereunder, the
Aircraft shall be: (i) free and clear of all Liens, except for the Lien of the
Indenture, Head Lessor's Liens, Lessor's Liens and Lenders' Liens, (ii) duly
certified as an airworthy aircraft by the FAA under Part 121 of the regulations
promulgated under the Federal Aviation Act and with a current and valid
Airworthiness Certificate installed on the Aircraft, unless such certificate
shall have been suspended or revoked as a result of the suspension or
revocation of the registration of the Aircraft under the Federal Aviation Act
due to the ineligibility of the Aircraft to be registered in the name of Lessor
under the Federal Aviation Act (whether by means of a voting trust agreement or
otherwise) in which case the Aircraft shall nevertheless meet all conditions
for such certification and for the issuance of such certificate; (iii) in full
airworthy condition for over water and EROPS operation according to the FAA
standards required to allow the Aircraft to be operated under, and in full
compliance with, such Airworthiness Certificate and Part 121 of the regulations
promulgated under the Federal Aviation Act for such operation, such compliance
to be by means of such mechanical repairs or modifications or such inspections
as may be required thereby, but not by operational
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restrictions, by logbook entries or other method of acceptance of such
restrictions; (iv) in full compliance with Lessee's Maintenance Program; (v) to
the extent the owner of the Aircraft is a "citizen of the United States" within
the meaning of Section 40102(a)(15) of the Federal Aviation Act and reasonably
cooperative with Lessee at Lessee's expense with respect to effecting such
registration, duly registered in the name of the Lessor or other then owner of
the Aircraft under the Federal Aviation Act; (vi) in full compliance with the
maintenance and operation provisions of this Lease and all FAA airworthiness
directives, mandatory service bulletins and equivalent requirements which by
their terms require compliance on or before the last day of the Term (without
regard to any deferral, waiver, deviation or exemption granted by the FAA
specifically to Lessee delaying such compliance); (vii) in good and airworthy
operating condition, and in the same condition (including, without limitation,
in a passenger configuration suitable for passenger revenue service) as when
delivered to Lessee hereunder, ordinary wear and tear excepted, with no open or
outstanding deferred maintenance items, scheduled or unscheduled, with all
systems and components fully serviceable and operational and with no placards
restricting operation or use, and (viii) with all remaining warranties,
indemnities, policies and guarantees referred to in Section 5(d) made available
to Lessor in a manner and by documents in form and substance reasonably
satisfactory to Lessor.
(c) Engines. In the event any engine not owned by Lessor shall be
installed on the Aircraft on any Return Occasion, without limiting Lessee's
obligations under the Tax Indemnification Agreement, such engine shall be of
the same model and equivalent modification status as the Engines or, at
Lessee's option, an IAE engine of an improved model suitable for installation
and use on the Airframe without diminishing the value, remaining useful life or
utility of such Airframe, in each such case having a value, remaining useful
life and utility at least equal to (as determined in accordance with the
Appraisal Procedure), and be in an operating condition as good as the Engines,
assuming the Engines were in the condition and repair as required by the terms
hereof immediately prior to such termination and shall conform to the return
condition requirements set forth in this Section 16 and Exhibit E, and Lessee,
at its own expense and concurrently with such delivery, shall cause such engine
to become an Engine by complying with Section 11(b) hereof. Lessee's
obligation to comply with the terms of this Section 16(c) shall be conditioned
on Lessor's transferring to Lessee all of Lessor's right, title and interest in
and to any Engine not installed on the Aircraft at the Return Occasion "AS IS,
WHERE IS," without any
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representation, warranty or recourse of any kind whatsoever, express or
implied, except a warranty that such Engine is free and clear of Lessor's
Liens.
(d) Records and Documents. Upon the return of the Aircraft, Lessee
shall deliver to Lessor (i) all logs, manuals and data, and inspection,
modification, overhaul and other records, related to the Aircraft, including,
without limitation, those required to be maintained with respect thereto under
applicable rules and regulations of the FAA, together with a detailed
description of the Maintenance Program then applied to the Aircraft and shall
provide Lessor and its designees access to the Maintenance Program which is
sufficient for a Person to maintain the Aircraft under an FAA approved
maintenance program after the Term or to transition maintenance to another
program, including, without limitation, another registry, or, in the event an
Event of Default shall have occurred, to continue to maintain the Aircraft
under the Maintenance Program, in each case as Lessor may reasonably request,
and all documentation with respect to the Aircraft set forth on Exhibit B or
otherwise delivered to Lessee at delivery thereof, and (ii) all records
necessary or required by the FAA to certify and place the Aircraft on an FAA or
other country's, as the case may be, approved maintenance program. All of the
foregoing shall, at Lessee's expense, be up-to-date and in the latest revision
status as of the last day of the Term, including, without limitation, all
software and other electronically-held materials which have been supplied by or
on behalf of Manufacturer, Manufacturer's Subsidiary or Original Head Lessee,
which must be updated to the latest revision status as of the last day of the
Term within such software base and all data therein or pertaining thereto shall
be deemed property of Lessor and shall be delivered to Lessor. If hard, i.e.,
non-computerized, copies of English language maintenance records are not
available, then Lessee shall cause the appropriate action to be taken with the
pertinent regulatory agencies to ensure that Lessor and the FAA are provided
with all requested necessary and proper guarantees of methods of compliance,
component overhaul and management, scheduling, quality control, serial number
verification, etc. These records shall be all inclusive to the Aircraft,
Airframe, Engines, components, rotables, and assemblies and, as a minimum,
extend to include all activities associated with each of the last completed
maintenance checks, repairs, scheduled inspections and functional tests, and
overhauls performed under Lessee's Maintenance Program. All components and
assemblies identified with safe life limits shall be identified with their
service histories, accumulated cycles or flight hours as applicable and
remaining service lives on a separate listing. All components and assemblies
which are identified on the
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maintenance records by part numbers and serial numbers other than the
manufacturer's shall be provided with interchange or cross reference listing
necessary to establish complete traceability. All documentation, flight, and
maintenance records as specified by United States Federal Aviation Regulations
91.173, 91.174, and each paragraph of regulation 121.380 which normally
accompany the transfer of an aircraft which has been operating in regulated
commercial air service, shall be delivered to Lessor with the Aircraft. Any
documents or records required to be delivered hereunder shall be in English.
(e) Condition of Aircraft. Upon any Return Occasion, Lessee shall
return such Aircraft to Lessor in such condition that the Aircraft shall also
comply with each and every condition and requirement set forth elsewhere in
this Lease, including Exhibit E hereto.
(f) Final Inspection. Upon any Return Occasion, Lessee shall make the
Aircraft available to Lessor at the location where the "block 'C' Check" (or
equivalent level designated check or checks) required hereunder to be performed
immediately prior to redelivery is to be performed for detailed inspection of
the documents referred to in paragraph (d) above and the Airframe, Engines and
Parts structure and parts, at Lessee's expense (excluding compensation to
representatives of Lessor), in order to verify that the condition of such
Aircraft complies with the requirements set forth above (such inspection being
hereinafter referred to as the "Final Inspection"). The Final Inspection shall
be combined with such "block 'C' Check" (or equivalent level check or checks)
and may include such other items as reasonably requested by Lessor. Lessee
shall give Lessor not less than thirty (30) days prior written notice of the
commencement date of such Final Inspection. The period allowed for the Final
Inspection shall be the same period during which such "block 'C' Check" is
being performed and shall have such duration as to permit the opening of any
areas of the Aircraft which are necessary or advisable to satisfy Lessor as to
compliance with the requirements of this Section 16 and Exhibit E. The Final
Inspection shall commence on the date so noticed which shall be on or before
the expiration of the Term with respect to the Aircraft and shall continue on
consecutive days until all activity required above to be conducted has been
concluded. To the extent that any portion of the Final Inspection extends
beyond the expiration of the Term, unless Lessor has terminated the Lease
pursuant to Section 18(g) 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
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concluded and Lessee shall pay Rent during any such extension in an amount
equal to the average daily Basic Rent or Renewal Rent, as the case may be, paid
in respect of the last year of the Basic Term or Renewal Term, as the case may
be (and Stipulated Loss Value during such extension shall equal the Stipulated
Loss Value on the last day of the Basic Term or Renewal Term, as the case may
be); provided, however, that Lessee shall not be required to pay Rent with
respect to the Aircraft during the period of extension to the extent that
Lessor is responsible for the delay in completion of the Final Inspection. All
storage expenses attributable to any Term extension pursuant to the preceding
sentence shall be payable by Lessee, except that Lessee shall not be liable for
any storage expenses which are incurred after the sixtieth (60th) day after the
Term to the extent that storage continues thereafter due to Lessor's delay in
completion of the Final Inspection.
(g) Aircraft Records and Documents. In order to enable Lessor to
prepare for the Final Inspection of the Aircraft pursuant to Subsection 16(f)
above, Lessee agrees to make available to Lessor at a maintenance base of
Lessee with adequate facilities for short-term maintenance, where 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
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suffered as a result of Lessee's failure to effect the return of the Aircraft
at the time, in the place and in the condition as specified in this Section 16
and Exhibit E hereto.
(i) Functional Flight Check. Immediately prior to the expiration of
the Term, Lessor will be permitted to conduct a non-commercial functional
flight check flight of no more than two (2) hours duration in accordance with
the Manufacturer's functional flight check procedures at Lessee's expense to
demonstrate the airworthiness of the Aircraft and proper functioning of all
systems and components. A qualified pilot and up to five (5) other
representatives selected by Lessor may take part in such flight to verify
compliance of the Aircraft with the requirements of this Lease, provided, that
Lessor shall be responsible for the charges of such qualified pilot and
representatives. Lessee may combine the functional flight check provided in
this Section 16(i) with the delivery flight specified in Section 16(a) and such
functional flight check shall include the landing. Any discrepancy or
malfunction detected during any functional flight check (including a functional
flight check combined with a delivery flight) shall be corrected, at Lessee's
expense, and prior to the expiration of the Term. To the extent that any
actions to correct any such discrepancy or malfunction extend beyond the Term,
the provisions of the first sentence of Section 16(h) shall apply. All storage
expenses attributable to any Term extension pursuant to the preceding sentence
shall be payable by Lessee.
(j) Export Certificate of Airworthiness. Lessee shall, at Lessee's
expense, take such action as Lessor may reasonably request to assist Lessor in
obtaining any required documents in relation to the export of the Aircraft from
the United States (including, without limitation, a valid and subsisting export
certificate of airworthiness with respect to the Aircraft and export license)
and in relation to the deregistration of the Aircraft.
(k) Service Bulletin and Modification Kits. Lessee shall deliver to
Lessor, at no cost to Lessor, all service bulletin kits furnished without
charge by the manufacturer for installation on the Aircraft which have not been
so installed together with appropriate instructions for installation. In the
event such uninstalled kits were purchased or manufactured by Lessee, then
Lessor shall be advised of such kits by Lessee and have a right of first
refusal to purchase such kits at Lessee's cost for a period of ninety (90) days
after return.
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(l) Storage Upon Return. Upon any Return Occasion, Lessee shall, at
Lessor's request and at Lessee's risk and expense, in addition to other storage
referred to above, arrange for the parking, storage and insurance of the
Aircraft for a period not exceeding sixty (60) days at such reasonable location
as Lessor requests where Lessee has or can arrange for storage. Lessee shall
pay or cause to be paid all costs and expenses for such parking, storage and
insurance.
(m) Resale/Release Cooperation. During the last twelve (12) months of
the Term, with reasonable notice and at reasonable times, Lessee will
cooperate, and cause any Permitted Sublessee to cooperate, in all reasonable
respects, with the efforts of Lessor to sell or lease the Aircraft after the
end of the Term, by permitting prospective purchasers or lessees, except to the
extent prohibited by applicable Law, to inspect the Aircraft and the records
relating thereto to the extent it does not unreasonably interfere with the
operation or maintenance of the Aircraft or the conduct of Lessee's business.
Section 17. Events of Default.
Any one or more of the following occurrences or events shall
constitute an Event of Default (whether any such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any other Governmental Entity):
(a) Lessee shall fail to make (i) any payment of Basic Rent, Renewal
Rent or Stipulated Loss Value to Lessor within three (3) Business Days after
the date on which such payment is due, or (ii) any other payment of
Supplemental Rent due hereunder within ten Business Days after the date on
which such payment is due and Lessee has received written demand therefor by
the party entitled thereto; provided that any failure of Lessee to pay to
Lessor or the Owner Participant when due any Excepted Payments (as defined in
the Indenture) shall not constitute an Event of Default unless Lessor or Owner
Participant delivers notice to Lessee; or
(b) Lessee shall fail to obtain and maintain in full force and effect
any insurance required under the provisions of Section 12 hereof or shall
operate the Aircraft outside of the scope or in violation of the terms of the
insurance or United States Government indemnity coverage required to be
maintained with respect to such Aircraft; or
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(c) Any representation or warranty made by Lessee herein or in the
Refunding Agreement or in any certificate furnished by Lessee in connection
herewith or therewith is or was incorrect at the time made in any material
respect and such incorrectness shall not have been cured within thirty (30)
days after the receipt by Lessee of a written notice from Lessor or the
Indenture Trustee advising Lessee of the existence of such incorrectness; or
(d) Lessee shall fail to perform or observe any covenant, condition,
or agreement to be performed or observed by it pursuant to this Lease or the
Refunding Agreement, and such failure shall continue uncured for thirty (30)
days after written notice thereof is given by Lessor or Indenture Trustee to
Lessee; provided, however, that if Lessee shall have undertaken to cure any
such failure which arises under the first or second sentence of Section 6(c) or
Section 6(d), as such provisions of Section 6 relate to maintenance, service,
repair or overhaul, or Section 9, and notwithstanding the diligence of Lessee
in attempting to cure such failure, such failure is not cured within said
thirty (30) day period but is curable with future due diligence, there shall
exist no Event of Default under this Section 17 so long as Lessee is proceeding
with due diligence to cure such failure and such failure is remedied not later
than one hundred eighty (180) days after receipt by Lessee of such written
notice; or
(e) Lessee consents to the appointment of a custodian, receiver,
trustee or liquidator of itself or all or any material part of Lessee's
property or Lessee's consolidated property, or Lessee admits in writing its
inability to, or is unable to, or does not, pay its debts generally as they
come due, or makes a general assignment for the benefit of creditors, or Lessee
files a voluntary 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 in paragraph (e), (f) or (g) of Section 17 hereof; and at any
time thereafter, so long as any outstanding Event of Default shall not have
been remedied, Lessor may do one or
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more of the following with respect to all or any part of the Airframe and any
or all of the Engines as Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, applicable Law then in effect:
(a) Demand that Lessee, and Lessee shall upon the written demand of
Lessor and at Lessee's cost and expense, immediately return, and the Lessee
hereby agrees that it shall return promptly all or such part of, the Aircraft
to Lessor in the manner specified in such notice, in which event such return
shall not be delayed for the purposes of complying with the return conditions
specified in Section 16 and Exhibit E hereof (none of which conditions shall be
deemed to affect Lessor's possession of the Aircraft) or delayed for any other
reason; provided, however, that Lessee shall remain and be liable to Lessor for
amounts provided for herein or other damages resulting from the Aircraft or any
Engine not being in the condition required by Section 16 and Exhibit E.
Notwithstanding the foregoing, at Lessor's option, Lessee shall be required
thereafter to take such actions as would be required by the provisions of this
Lease if such Aircraft were being returned at the end of the Term hereof with
respect to such Aircraft. In addition, Lessor or Lessor's agent, at its option
and to the extent permitted by applicable Law, may but shall not be obligated
to enter upon the premises where all or any part of the Aircraft, Airframe
and/or Engines are located to take immediate possession of and, at Lessor's
option, remove the same (and/or any engine which is not an Engine but which is
installed on the Airframe, subject to the rights of the owner, lessor or
secured party thereof) by summary proceedings or otherwise, all without
liability accruing to Lessor or Lessor's agent for or by reason of such entry
or taking of possession or removal whether for the restoration of damage to
property, or otherwise, caused by such entry or taking, except direct damages
to the extent caused by Lessor's gross negligence or willful misconduct.
(b) With or without taking possession thereof, sell or cause to be
sold, the Aircraft, Airframe or Engine or any part thereof, or Lessor's
interest therein, at private or public sale, as Lessor in its sole discretion
may determine, or otherwise dispose of, hold, use, operate, or lease to others,
or keep idle the Aircraft, Airframe or Engine, as Lessor in its sole discretion
may determine, all free and clear of any rights of Lessee or any Permitted
Sublessee and except as hereinafter set forth in this Section 18. Lessor may
be the purchaser at any such sale.
(c) Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights
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under paragraph (a) or paragraph (b) above, Lessor, by written notice to Lessee
specifying a payment date which shall be a Stipulated Loss Value Date, may
demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the
Stipulated Loss Value Date specified in such notice, as liquidated damages for
loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, due for the period commencing after the Stipulated
Loss Value Date specified for payment in such notice), any unpaid Rent for the
Aircraft to and including the Stipulated Loss Value Date specified in such
notice, plus whichever of the following amounts as Lessor may specify, in its
sole and absolute discretion, in such notice: (i) an amount equal to the
excess, if any, of the sum of the Stipulated Loss Value for the Aircraft,
Airframe or Engine computed as of the date specified in such notice plus, if
such date is a Basic Rent Payment Date or a Renewal Rent Payment Date, an
amount equal to the Basic Rent or Renewal Rent, as the case may be, due on such
date, over the fair market sale value of the Aircraft, Airframe or Engine as of
the date specified in such notice or (ii) an amount equal to the excess, if
any, of the sum of the Stipulated Loss Value for the Aircraft, Airframe or
Engine computed as of the date specified in such notice plus, if such date is a
Basic Rent Payment Date or a Renewal Rent Payment Date, an amount equal to the
Basic Rent or Renewal Rent, as the case may be, due on such date, over the fair
market rental value of the Aircraft for the remainder of the Term as of the
date specified in such notice.
(d) In the event Lessor, pursuant to paragraph (b) above, shall have
sold the Aircraft, Airframe or Engine or its interest therein, Lessor, in lieu
of exercising its rights under paragraph (c) above, may, if it shall so elect,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor on such demand,
as liquidated damages for loss of bargain and not as a penalty (in lieu of the
Basic Rent or Renewal Rent, as the case may be, due for the period commencing
after the Stipulated Loss Value Date immediately prior to the date such sale
occurs), any unpaid Rent due to and including the date of sale, plus the amount
by which the Stipulated Loss Value of such Aircraft, Airframe or Engine,
computed as of such Stipulated Loss Value Date, exceeds the net proceeds of
such sale (after deducting all costs of such sale).
(e) In lieu of exercising its rights under paragraph (b), (c) or (d)
above, by notice to Lessee, Lessor 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
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Rent, as the case may be, payable in advance for the period on and after the
Stipulated Loss Value Date), any unpaid Basic Rent or Renewal Rent, as the case
may be, for such Aircraft due and unpaid for any period prior to and including,
and any Basic Rent or Renewal Rent payable on, the Stipulated Loss Value Date,
plus, an amount equal to the Stipulated Loss Value for the Aircraft computed as
of such Stipulated Loss Value Date; and upon such payment of liquidated damages
and the payment of all other Rent then due hereunder and the discharge of the
Lien of the Indenture pursuant to Section 10.01 thereof, Lessor shall, at
Lessee's expense, transfer, without recourse or warranty (except as to the
absence of Lessor's Liens and the Lien of the Indenture), all right, title and
interest of Lessor in and to the Aircraft to Lessee or as it may direct and
Lessor shall, at Lessee's expense, execute and deliver such documents
evidencing such transfer and take such further action as Lessee shall
reasonably request.
(f) In the event that Lessor, pursuant to paragraph (b) above, shall
have relet the Aircraft, Airframe or Engine under a long term lease, Lessor, in
lieu of exercising its rights under paragraph (c) above with respect to such
Aircraft, Airframe or Engine, may, if it shall so elect, demand that Lessee pay
Lessor, and Lessee shall pay Lessor on such demand, as liquidated damages for
loss of bargain and not as a penalty (in lieu of the Basic Rent or Renewal
Rent, as the case may be, for such Aircraft due after the time of reletting)
any unpaid Rent for such Aircraft due up to the date of reletting, plus the
amount, if any, by which the aggregate Basic Rent or Renewal Rent, as the case
may be, for such Aircraft which would otherwise have become due over the Basic
Term or Renewal Term, as the case may be, discounted periodically (equal to
installment frequency) to present worth as of the date of reletting at the rate
of 8.50% per annum, exceeds the aggregate basic rental payments to become due
under the reletting from the date of such reletting to the date upon which the
Term for such Aircraft, Airframe or Engine would have expired but for Lessee's
default, discounted periodically (equal to installment frequency) to present
worth as of the date of the reletting at the rate of 8.50% per annum.
(g) Cancel, rescind and/or terminate this Lease by written notice to
Lessee which cancellation, rescission and/or termination shall be effective
upon dispatch, whereupon Lessee's right to possess and use the Aircraft,
Airframe or Engine shall immediately cease, however, Lessee shall be and remain
liable for damages and losses suffered by Lessor and all other amounts payable
by Lessee hereunder.
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(h) Lessor may exercise any other right or remedy which may be
available to it under applicable laws, or may proceed by appropriate court
action or actions, either at law or in equity, to enforce any other remedy or
right Lessor may have hereunder, under the other Operative Documents, at law or
in equity, including, without limitation, proceed by court order to enforce
performance by Lessee of the applicable covenants of this Lease or to recover
damages for the breach thereof.
In addition to the foregoing, Lessee shall be liable (without
duplication of the remedies above and of Lessee's obligations under Section 10
and Section 13 hereof and subject to the exclusions set forth therein) for any
and all unpaid Rent before, during or after the exercise of any of the above
mentioned remedies (including without limitation interest on unpaid amounts
with respect to all amounts not paid when due, including, without limitation,
any amounts payable pursuant to the foregoing provisions of this Section 18),
and, except as specified above, until satisfaction of all of Lessee's
obligations to Lessor hereunder and for all legal fees and other costs and
expenses incurred by any Indemnitee by reason of the occurrence of any Event of
Default or the exercise of an Indemnitee's remedies with respect thereto,
including all costs and expenses incurred in connection with the return of the
Aircraft in accordance with the terms of Section 16 and Exhibit E hereof or in
placing the Aircraft, Airframe or Engine in the condition and with
airworthiness certification as required by such Section and such Exhibit and
costs and expenses related to the Lease, the Refunding Agreement, the
Indenture, the Pass Through Trust Agreements, the Intercreditor Agreement or
each Liquidity Facility. All liquidated damages payable pursuant to the
foregoing shall bear interest, which shall be payable on the date the payment
of such liquidated damages is due at a rate equal to the Interest Rate from and
including the date due to and excluding the date actually paid.
In effecting any repossession, Lessor, its representatives and agents,
to the extent permitted by applicable Law, (i) shall have the right to enter
upon any premises where it reasonably believes the Aircraft, the Airframe, an
Engine or Part to be located, (ii) shall not be liable, in conversion or
otherwise, for the taking of any personal property of Lessee which is in or
attached to the Aircraft, the Airframe, an Engine or Part which is repossessed,
(iii) shall not be liable or responsible, in any manner, for any damage or
injury to any of Lessee's 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)
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shall have the right to maintain possession of and dispose of the Aircraft, the
Airframe, an Engine or Part on any premises owned by Lessee or under Lessee's
control.
If requested by Lessor, Lessee shall, at its sole expense, assemble
and make the Aircraft, the Airframe, an Engine or Part available at a place
designated by Lessor in accordance with Section 16 and Exhibit E hereof.
Lessee hereby agrees that, in the event of the return to or repossession by
Lessor of the Aircraft, the Airframe, an Engine or Part, or otherwise upon the
occurrence of an Event of Default, any rights in any warranty (express or
implied), service life policy, infringement indemnity, performance guaranty or
the like heretofore made available to Lessee or otherwise held by Lessee shall
without further act, notice or writing be deemed automatically cancelled and
shall be enforceable solely by and for the benefit of, and assigned to, Lessor.
Lessee shall be liable to Lessor (without duplication) for all expenses,
disbursements, costs and fees incurred in (i) repossessing, storing,
preserving, shipping, maintaining, repairing and refurbishing the Aircraft, the
Airframe, an Engine or Part to the condition required by Section 16 and Exhibit
E hereof and (ii) preparing the Aircraft, the Airframe, an Engine or Part for
sale or lease, advertising the sale or lease of the Aircraft, the Airframe, an
Engine or Part and selling or releasing the Aircraft, the Airframe, an Engine
or Part. Lessor is hereby authorized and instructed, at its option, to make
expenditures which Lessor considers advisable to repair and restore the
Aircraft, the Airframe, an Engine or Part to the condition required by Section
16 and Exhibit E hereof, all at Lessee's sole expense.
For the purpose of this Section 18, the "fair market rental value" or
the "fair market sales value" of the Aircraft, Airframe, an Engine or Part
shall be determined pursuant to the Appraisal Procedure.
At any sale of the Aircraft, the Airframe, an Engine or Part pursuant
to this Section, Owner Participant may bid for and purchase such property and
Lessee agrees that the amounts paid therefor shall be used in the computations
contemplated herein and Lessee shall remain liable for any deficiency.
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
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exercise by Lessor of any or all of such other remedies. No waiver by Lessor
of any Event of Default shall in any way be, or be construed to be, a waiver of
the same Event of Default in the future or any other prior or future Event of
Default. To the extent permitted by Law, Lessee hereby waives any right it may
have to require Lessor to mitigate damages in connection with the remedies
described in Sections 18(c), (d), (e) or (f) above.
Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact
(which appointment is coupled with an interest) to execute all documents deemed
necessary to release, terminate and void Lessee's interest in the Aircraft
leased hereunder or otherwise to more effectively carry out Lessor's rights and
remedies and to file said documents for recordation with the FAA, under the
Uniform Commercial Code, and with any other appropriate Governmental Entity,
and otherwise act in Lessee's name and place with respect to the Aircraft,
provided that an Event of Default has occurred and is continuing and this Lease
has been declared or deemed to be in default.
The provisions of this Section 18 shall continue in full force and
effect and survive the expiration or other termination of this Lease and are
expressly made for the benefit of and shall be enforceable by Lessor, Owner
Participant and, if the Lien of the Indenture has not been discharged,
Indenture Trustee.
Section 19. Security for Obligations. In order to secure the
Equipment Notes, Lessor has created, by the Indenture, a security interest in
the Trust Indenture Estate, including, without limitation, this Lease and all
Rent and other sums payable hereunder, except as provided in the Indenture and
subject in each case to Liens permitted hereunder. The Indenture provides,
among other things for the assignment by Lessor to Indenture Trustee of its
right, title and interest in, to and under this Lease, to the extent set forth
in the Indenture, for the creation of a first-mortgage lien on and perfected
security interest in all of Lessor's right, title and interest in and to the
Aircraft in favor of Indenture Trustee. Lessee hereby 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
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discharged, (a) Lessee shall make all payments of Rent, Stipulated Loss Value
and all other amounts payable hereunder (other than Excepted Payments) to or as
directed by Indenture Trustee as provided in Sections 4(c) and 4(d), and (b)
Indenture Trustee shall be entitled to exercise the rights of Lessor (but not
Owner Participant) (other than Expected Rights) herein as and to the extent
provided herein or in the Indenture and any express reference to Indenture
Trustee in any Section of this Lease shall not give rise to any implication
that Indenture Trustee may not exercise the rights of Lessor in any other
Section of this Lease as and to the extent provided in the Indenture.
The provisions of this Lease and the Refunding Agreement which require
or permit action by, the payment of monies to, the consent or approval of, the
furnishing of any instrument or information to, or the performance of any other
obligation to, Indenture Trustee, shall not be effective, and the Sections
hereof containing such provisions shall be read as though there were no such
requirements or provisions and all moneys otherwise payable to Indenture
Trustee hereunder shall be paid to Lessor, after Lessee shall have received
from Indenture Trustee notice of discharge of the Lien of the Indenture.
Any payment or performance by Lessee to or as directed by Indenture
Trustee shall constitute payment or performance of such obligation to Lessor by
Lessee under this Lease.
Any payment or performance of an obligation of Lessee under this Lease
by a Permitted Sublessee shall constitute payment or performance of such
obligation by Lessee.
Section 20. Renewal Option. Lessee may renew this Lease as provided
in the following clause (i) and subject to the following clause (ii):
(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
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twenty-four (24) months prior to the last day of the Basic Term. The
Renewal Rent for the Renewal Term shall be the "fair market rental value"
of the Aircraft for such Renewal Term (the "renewal fair market rental
value") as determined in accordance with the Appraisal Procedure. For
purposes of this paragraph (i), the Appraisal Procedure shall be initiated
by Lessee no earlier than nine (9) months prior to the end of the Basic
Term. If Lessee shall fail to exercise its option to extend the term of
this Lease for the Renewal Term in accordance with the provisions of this
paragraph, all of Lessee's rights to extend the Term for such Renewal Term
shall expire. Lessee shall pay all reasonable costs and expenses,
including, without limitation, reasonable legal fees and expenses, incurred
by Lessor, Owner Participant and the Indenture Trustee in connection with
the exercise of such option.
(ii) Provisions Applicable During Renewal Term. All provisions
of this Lease, including, without limitation, as to Rent and Stipulated
Loss Value (which shall be, with appropriate adjustments, in no event less
than the greater of 120% of the "fair market sales value" of the Aircraft
as of the first day of the Renewal Term as determined pursuant to the
Appraisal Procedure or the amount set forth on Exhibit A as of the end of
the Basic Term), shall remain in effect and be applicable during such
Renewal Term, except that Lessee shall pay to the Lessor, semi-annually in
arrears as Renewal Rent on each Renewal Rent Payment Date, the amount for
such Renewal Term as determined in accordance with clause (i) of this
Section 20.
Section 21. Miscellaneous.
(a) Severability, Amendment, and Construction. Any provision of this
Lease which is prohibited or 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
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shall constitute an agreement of lease, and nothing herein shall be construed
as conveying to Lessee any right, title, or interest in the Aircraft or any
Engine or Part except as a lessee only. Without limiting the foregoing, the
parties hereto agree to treat this Agreement as a lease for United States
federal income tax purposes and Lessee will not file a tax return which is
inconsistent with the foregoing and nothing contained herein shall be construed
as an election by Lessor to treat Lessee as having acquired the Aircraft for
the purpose of the investment credit allowed by Section 38 of the 1954 Code or
any similar or successor statute. The headings in this Lease are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
(b) GOVERNING LAW. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE WITHOUT REGARD
TO PROVISIONS GOVERNING CONFLICTS OF LAW WHICH MIGHT LEAD TO THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
(c) Notices. All notices and instructions between Lessor and Lessee
required or permitted under the terms and provisions hereof shall be in writing
and shall be sent to Lessor or Lessee at their respective addresses set forth
in Exhibit C hereto (or such other addresses as the parties may designate from
time to time in writing). All notices, reports or other documents provided to
Lessor or Lessee shall be provided concurrently to Indenture Trustee (until
such time as the Lien of the Indenture is discharged) and to Owner Participant,
at such address as Owner Participant and Indenture Trustee, respectively, may
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
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a waiver of any Event of Default which may arise out of Lessee's nonperformance
of such obligation, nor an election or waiver by Lessor or any remedy or right
available to Lessor under or in relation to this Lease.
(e) Counterparts. To the extent, if any, that this Lease constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by or on behalf of Indenture Trustee on the
signature page thereof. Subject to the preceding sentence, this Lease may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
(f) Quiet Enjoyment. Lessor covenants that, so long as no Event of
Default shall have occurred and be continuing and this Lease has not been
declared or deemed to be in default, Lessor shall not take or cause to be taken
any action to interfere with the right of Lessee to the possession, use,
operation and quiet enjoyment of and other rights with respect to the Aircraft
hereunder, and all rents, revenues, profits and income therefrom, in accordance
with the terms of this Lease without interference from Lessor or any Person
lawfully claiming by or through it, provided that Lessor and Owner Participant
shall not be liable for any such interference by Indenture Trustee, Pass
Through Trustee, Note Holder or any other Person lawfully claiming by or
through them, and provided further, that the 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 in lieu thereof, Lessor and Lessee agree to amend this Lease
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and take such other action not inconsistent with this Lease as Lessor
reasonably deems necessary so as to afford to Lessor the rights and benefits as
such amended or substituted statute confers upon owners and lessors of aircraft
similarly situated to Lessor.
(l) U.S. Registration Number. At Lessee's request, Lessor shall use
its best efforts to have the Aircraft registered under the United States
Registration Number designated by Lessee.
(m) Submission to Jurisdiction; Service of Process; Waiver of Forum
Non Conveniens; Waiver of Jury Trial. Each of Lessee and Lessor hereby
irrevocably agrees that any suit, action or proceeding related to this Lease or
any of the other Operative Documents to which it is a party or the subject
matter hereof or thereof or any of the transactions contemplated hereby and
thereby may be instituted in, and submits for itself and its property to the
non-exclusive jurisdiction of, (i) the courts of the State of New York in New
York County and (ii) the United States District Court for the Southern District
of New York. Each of Lessee and Lessor represents and warrants that it is not
currently entitled to, and agrees that to the extent that Lessee or Lessor
hereinafter may acquire, any immunity (including, without limitation, sovereign
immunity) from jurisdiction of any court or from any legal process, it hereby,
to the extent permitted by Law, waives such immunity, and agrees not to assert,
by way of motion, as a 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
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their successors and assigns (as applicable). Final (after all appeals)
judgment (the enforcement of which has not been stayed) against either Lessee
or Lessor obtained in any suit originally brought in the court of the State of
New York in New York County or in the United States District of New York shall
be conclusive, and, to the extent permitted by applicable Law, may be enforced
in other jurisdictions by suit on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and of the amount of any
indebtedness or liability of Lessee therein described; provided that the
plaintiff at its option may bring suit, or institute other judicial
proceedings, against Lessee or Lessor, as the case may be, or any of their
assets in the courts of any country or place where such Person or such assets
may be found. EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THE OPERATIVE DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
LESSOR/LESSEE RELATIONSHIP BEING ESTABLISHED, including, without limitation,
contract claims, tort claims, breach of duty claims and other common law and
statutory claims. Lessor and Lessee represent and warrant that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE OPERATIVE
DOCUMENTS. In the event of litigation, this 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
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otherwise be liable and (ii) nothing contained in this Section 21(n) shall be
construed to limit the exercise and enforcement in accordance with the terms of
this Agreement or such other agreements of rights and remedies against the
Trust Estate. The foregoing provisions of this Section 21(n) shall survive the
termination of this Agreement and the other Operative Documents.
(o) Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for
all purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 14(d) of the Refunding Agreement) and without in any way
altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
(p) Article 2-A of the UCC. The parties hereto agree that the
Original Head Lease, as amended and restated by this Amended and Restated
Aircraft Lease Agreement [GPA 1989 BN-11] (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> 117
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:
-112-
<PAGE> 118
ANNEX I
to
Amended and Restated Aircraft Lease Agreement
DESCRIPTION OF ORIGINAL HEAD LEASE
[To be provided by FAA Counsel]
<PAGE> 119
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 81
Stipulated
Loss Value
Date
(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, "Stipulated Loss Value Date" shall mean the __th
day of each calendar month.
(2) Thereafter, such amount as determined in accordance with Section
20(ii) of the Lease.
A-1
<PAGE> 120
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)
D. AIRCRAFT HISTORY RECORDS
13. Log Books
14. Aircraft Maintenance History Cards
B-1
<PAGE> 121
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-2
<PAGE> 122
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
________], as set forth in Schedule I
hereto.
Basic Rent
Payment Date: Each such date set forth as such on
Schedule I hereto.
Letter of Credit
Face Amount: The amount set forth as such on Schedule I
hereto
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,
Account No. _____ and thereafter (and at
all times with respect to Excepted
Payments), to _____ 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 during the Basic Term (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 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.
C-1
<PAGE> 123
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: (302) 651-8882
Attention: Corporate Trust
Administration
C-2
<PAGE> 124
EXHIBIT D-1
to
Amended and Restated Aircraft Lease Agreement
LEASE SUPPLEMENT NO. 3
LEASE SUPPLEMENT [GPA 1989 BN-11] NO. 3, dated June __, 1997,
between WILMINGTON TRUST COMPANY, a Delaware corporation (not in its individual
capacity but solely as Owner Trustee under a Trust Agreement [GPA 1989 BN-11]
dated December 19, 1989, 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
Aircraft Lease Agreement [GPA 1989 BN-11] dated as of December 19, 1989, as
Amended and Restated as of June __, 1997 (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-11] No. 1 dated December 29, 1989
("Lease Supplement No. 1") and that certain Lease Supplement [GPA 1989 BN-11]
No. 2 dated January 5, 1995 ("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 leased to Lessee and
Lessee hereby confirms that it has leased from Lessor 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
29, 1989.
D-1
<PAGE> 125
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
5, 2013 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, 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-2
<PAGE> 126
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-3
<PAGE> 127
The undersigned acknowledges receipt of this original
counterpart of the foregoing Lease Supplement on this _______ day of June ___,
1997 and consents to the terms hereof.
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as
Indenture Trustee
By:
---------------------------------
Title:
D-4
<PAGE> 128
SCHEDULE 1
to
LEASE SUPPLEMENT NO. 3
Airbus Model A320-231
Airframe
<TABLE>
<CAPTION>
U.S. Registration No. Manufacturers Serial No.
<S> <C>
N632AW 81
</TABLE>
Installed
IAE
Engines
<TABLE>
<CAPTION>
Model No. Serial No.
<S> <C>
V2500 V0084
V2500 V0091
</TABLE>
D-5
<PAGE> 129
EXHIBIT D-2
to
Amended and Restated Aircraft Lease Agreement
LETTER OF CREDIT
D-6
<PAGE> 130
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 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
E-1
<PAGE> 131
"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.
(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
E-2
<PAGE> 132
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-3
<PAGE> 133
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.
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.
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 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),
F-1
<PAGE> 134
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
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.
(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
F-2
<PAGE> 136
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> 1
Exhibit 4.18
- --------------------------------------------------------------------------------
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-8]
Dated as of June __, 1997
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. 66
Registration No. N627AW
Leased by America West Airlines, Inc.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . 3
HABENDUM CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions . . . . . . . . . . . . . . . . 8
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes . . . . . . . . . . . . . . 22
SECTION 2.02. Issuance and Terms of Equipment Notes . . . . . . . 27
SECTION 2.03. Payments from Trust Indenture Estate
Only . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.04. Method of Payment. . . . . . . . . . . . . . . . . . 31
SECTION 2.05. Application of Payments . . . . . . . . . . . . . . 34
SECTION 2.06. Termination of Interest in Trust
Indenture Estate . . . . . . . . . . . . . . . . . 35
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes . . . . . . . . . . . . . . . . . 35
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes . . . . . . . . . . . . . . . . . 36
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation . . . . . . . . . . . . . . . . . . . 37
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 . . . . . . . . . . . . . . . . . . 45
SECTION 3.05. Other Payments . . . . . . . . . . . . . . . . . . . 46
SECTION 3.06. Payments to Owner Trustee . . . . . . . . . . . . . 46
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE . . . . . . . . . . 48
SECTION 4.01. Covenants of Trust Company and Owner
Trustee . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.02. Indenture Events of Default . . . . . . . . . . . . 49
SECTION 4.03. Certain Rights . . . . . . . . . . . . . . . . . . . 52
SECTION 4.04. Remedies . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.05. Return of the Aircraft, etc . . . . . . . . . . . . 57
SECTION 4.06. Remedies Cumulative . . . . . . . . . . . . . . . . 58
SECTION 4.07. Discontinuance of Proceedings . . . . . . . . . . . 59
SECTION 4.08. Waiver of Past Indenture Defaults . . . . . . . . . 59
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders . . . . . . . . . . . . . . . . . . 59
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default . . . . . . . . 60
SECTION 5.02. Action Upon Instructions . . . . . . . . . . . . . . 61
SECTION 5.03. Indemnification . . . . . . . . . . . . . . . . . . 61
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions . . . . . . . . . . . . 62
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions . . . . . . . 62
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts . . . . . . . . . . 63
SECTION 5.07. Indenture Supplements for Replacements . . . . . . . 66
SECTION 5.08. Effect of Replacement . . . . . . . . . . . . . . . 66
SECTION 5.09. Notices, etc. . . . . . . . . . . . . . . . . . . . 67
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant . . . . . . . . . . . . . . . . 67
SECTION 5.11. Evidence of Action Taken by Note Holder . . . . . . 69
SECTION 5.12. Right of Revocation of Action Taken . . . . . . . . 70
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties . . . . . . . . . . 70
SECTION 6.02. Absence of Duties . . . . . . . . . . . . . . . . . 71
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents . . . . . . . . . . . . . . 71
SECTION 6.04. No Segregation of Moneys; No Interest . . . . . . . 72
SECTION 6.05. Reliance; Agents; Advice of Counsel . . . . . . . . 72
SECTION 6.06. Capacity in Which Acting . . . . . . . . . . . . . . 73
SECTION 6.07. Compensation . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.08. May Become Note Holder . . . . . . . . . . . . . . . 73
</TABLE>
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SECTION 6.09. Further Assurances; Financing
Statements . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification . . . . . . . . . . . . . . 74
SECTION 7.02. Exculpation and Release of Liability . . . . . . . . 75
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee . . . . . . . . . 75
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor . . . . . . . . 75
SECTION 8.03. Appointment of Separate Trustees . . . . . . . . . . 77
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Lease Amendments and Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . 79
SECTION 9.02. Effect of Supplemental Indenture . . . . . . . . . . 82
SECTION 9.03. Documents to Be Given to Trustee . . . . . . . . . . 82
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures . . . . . . . . . . . . . 82
SECTION 9.05. Trustees Protected . . . . . . . . . . . . . . . . . 82
SECTION 9.06. Documents Mailed to Note Holders . . . . . . . . . . 82
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement . . . . . . . . 83
SECTION 9.08. Notices to Liquidity Provider . . . . . . . . . . . 83
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture . . . . . . . . . . . . . 83
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders . . . . . . . . . . . . . . 84
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding . . . . . . . . . . . . . . . . . . . 84
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders . . . . . . . . . . . . . 84
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease . . . . . . . . . . . . . . . . . 84
SECTION 10.06. Notices . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.07. Severability . . . . . . . . . . . . . . . . . . . 85
</TABLE>
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SECTION 10.08. No Oral Modifications or Continuing
Waivers . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.09. Successors and Assigns . . . . . . . . . . . . . . 85
SECTION 10.10. Headings . . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.11. Normal Commercial Relations . . . . . . . . . . . . 86
SECTION 10.12. Governing Law; Counterpart Form . . . . . . . . . . 86
SECTION 10.13. Section 1110 . . . . . . . . . . . . . . . . . . . 86
</TABLE>
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
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<PAGE> 6
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-8]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-8] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of June __, 1997, 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-8] dated as of December 19, 1989,
as supplemented by Trust Agreement Supplement [GPA 1989 BN-8] No. 1 dated
December 29, 1989, and as further supplemented by Trust Agreement Supplement
[GPA 1989 BN-8] No. 2 dated the date hereof (as amended, assigned, 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-8] dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated
December 29, 1989, which were recorded by the Federal Aviation Administration
on January 19, 1990 as one instrument and assigned Conveyance No. H68557 (as so
supplemented, the "Original Indenture"), (ii) the Owner Trustee and the
Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-8]
dated as of December 19, 1989, as supplemented by Lease Supplement [GPA 1989
BN-8] No. 1 dated December 29, 1989, which were recorded by the Federal
Aviation Administration on January 19, 1990 as one instrument and assigned
Conveyance No. H68558 and as further
<PAGE> 7
supplemented by Lease Supplement [GPA 1989 BN-8] No. 2 dated December, 1994,
which was recorded by the Federal Aviation Administration on February 27, 1995
and assigned Conveyance No. JJ13285 (collectively, as so supplemented, the
"Original Lease") and (iii) pursuant to the Original Indenture, the Owner
Trustee issued and sold to the Lenders (as defined in the Original Indenture)
the Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and restate
the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease
Termination Agreement [GPA 1989 BN-8] dated as of the date hereof among the
Original Head Lessee, as assignor, and the Original Sublessee, as assignee, the
Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-8] dated as of the date hereof between the Owner
Trustee and the Lessee (as so assigned, amended and restated, the "Amended and
Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and
(ii) cause the implementation of the Refinancing Transaction pursuant to which,
among other things, the Original Loan Certificates issued pursuant to the
Original Indenture shall be prepaid and new Equipment Notes shall be issued to
the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of
the Equipment Notes and (iii) to provide for the assignment, mortgage and
pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust
Indenture Estate hereunder, among other things, of certain of the Owner
Trustee's estate, right, title and interest in and to the Aircraft and, except
as hereinafter expressly provided, all of the Owner Trustee's right, title and
interest in, to and under the Lease (as amended and restated to date and as the
same may at any time and from time to time be further amended, restated or
otherwise modified in accordance with the terms thereof and hereof) and all
payments and other amounts received hereunder or thereunder in accordance with
the terms hereof or thereof, as security for, among other things, the Owner
Trustee's obligations to the Indenture Trustee, for the ratable benefit and
security of the Note Holders, subject to Section 2.13 and Article III hereof;
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
2
<PAGE> 8
set forth, in accordance with its terms, have been done and performed and have
happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to time outstanding
hereunder and the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Refunding
Agreement and the Equipment Notes, for the benefit of the Note Holders, and the
prompt payment of any and all amounts from time to time owing hereunder and
under the Refunding Agreement by the Owner Trustee, the Owner Participant and
the Lessee to the Note Holders and for the uses and purposes and subject to the
terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the Equipment Notes by the
Holders thereof, and of the sum of $1 paid to the Owner Trustee by the
Indenture Trustee at or before the delivery hereof, the receipt whereof is
hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture Supplement or any indenture supplemental hereto, are included within
the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time acquire an interest whether under any of
the Lease, the Hire Purchase Agreement, the Foreign Hire Purchase
Consent, the Foreign Lease Agreement, the Lease Acceptance Certificate,
the Hire Purchase Acceptance Certificate, the Foreign Lease Assignment,
the Foreign Lease Consents, the Foreign Lease Charge, the General
Assumption Agreement, the Foreign Power of Attorney, the Hire Purchase
Assignment, the Escrow Agreement or other Foreign Financing Document 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
3
<PAGE> 9
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 Warranty
Assignment; the Foreign Lease Agreement; the Lease Acceptance
Certificate; the Foreign Lease Consents; the Hire Purchase Agreement;
the Hire Purchase Acceptance Certificate; the Foreign Hire Purchase
Consent; the Foreign Power of Attorney; the Escrow Agreement; the
General Assumption Agreement; the Foreign Lease Charge; the Foreign
Lease Assignment; the Hire Purchase Assignment and each other Foreign
Financing Document; 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
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
described in the Foreign Lease Agreement or the Hire Purchase Agreement
or other Foreign Financing Document which could give rise to a right to
terminate either the Foreign Lease Agreement or the Hire Purchase
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;
(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),
4
<PAGE> 10
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/or the Foreign Lease Agreement and/or the Hire
Purchase Agreement and/or other Foreign Financing Document), and all
insurance proceeds with respect to the Aircraft or any part thereof,
including but not limited to the insurance required under Section 12 of
the Lease or under any comparable provision of any Assigned Sublease
(but excluding any excess insurance maintained by the Lessee and not
required under Section 12 of the Lease or any Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and all
rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any
other Person in accordance with the provisions of this Agreement, AND SUBJECT
TO Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the Owner Trustee
delivered to the Indenture Trustee the chattel paper original executed
counterparts of the Original Lease and Lease Supplement No. 1, certified copies
of the Purchase Agreement Warranty Assignment; execution copies of the Foreign
Lease Agreement; the Lease Acceptance Certificate; the Hire Purchase Acceptance
Certificate; the Foreign Lease Assignment;
5
<PAGE> 11
the Foreign Lease Consent; the Hire Purchase Agreement; the Hire Purchase
Assignment; the Foreign Hire Purchase Consent; the Foreign Power of Attorney;
the Foreign Lease Charge; the Escrow Agreement; the General Assumption
Agreement; and the original Second Aircraft Warranty Bill of Sale and the BFE
Bill of Sale. After the delivery of the Original Indenture but prior to the
delivery of this Indenture, the Owner Trustee delivered to the Indenture
Trustee the chattel paper original executed counterpart of 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
6
<PAGE> 12
otherwise) to ask, require, demand, receive and give acquittance for any and
all moneys and claims for moneys (in each case including insurance and
requisition proceeds but excluding Excepted Payments and Excepted Rights) due
and to become due to the Owner Trustee under or arising out of the Indenture
Documents and all other property which now or hereafter constitutes part of the
Trust Indenture Estate, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceedings which the Indenture Trustee may deem to be necessary
or advisable in the premises. Under the Lease, the Lessee is directed to make
all payments of Rent (other than Excepted Payments) and all other amounts which
are required to be paid to or deposited with the Owner Trustee pursuant to the
Lease (other than Excepted Payments) directly to the Indenture Trustee at such
address or addresses as the Indenture Trustee shall specify, for application as
provided in this Indenture. Pursuant to each Sublease Assignment, each
Permitted Sublessee will be directed from and after (i) notice of the
occurrence of a Lease Event of Default and (ii) notice that the Lease is
declared or deemed in default, to make all payments of rent and all other
amounts which are required to be paid to or deposited with the Lessee pursuant
to the related Assigned Sublease and which are assigned thereunder directly to
the Indenture Trustee at such address or addresses as the Indenture Trustee
shall specify, for application or to be held as provided in this Indenture.
The Owner Trustee agrees that promptly on receipt thereof, it will transfer to
the Indenture Trustee any and all moneys from time to time received by it
constituting part of the Trust Indenture Estate, for distribution by the
Indenture Trustee pursuant to this Indenture, except (a) to the extent the
Owner Trustee is entitled to distribution of such moneys pursuant to this
Indenture and (b) that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement any amounts distributed to it by the Indenture Trustee
under this Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Indenture Trustee, the Owner Trustee will
promptly and duly execute and deliver or cause to be duly executed and
delivered any and all such further instruments and documents as the Indenture
Trustee may reasonably deem desirable in obtaining the full benefits of the
assignment hereunder and of the rights and powers herein granted.
The Owner Trustee does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that it will not assign or pledge
or otherwise dispose of, so long as this Indenture shall remain in effect and
the Lien hereof shall not have been released pursuant to Section 10.01 hereof,
any of its estate, right, title or interest hereby assigned, to anyone other
than the Indenture Trustee, and that, with respect to such 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,
7
<PAGE> 13
Section 9.01) and except as to Excepted Payments and Excepted Rights, (i)
accept any payment from the Foreign Lessor, the Lessee or any Permitted
Sublessee under any of the Indenture Documents, enter into any agreement
amending, modifying or supplementing any of the Indenture Documents, or execute
any waiver or modification of, or consent under, the terms of any of the
Indenture Documents, (ii) settle or compromise any claim arising under any of
the Indenture Documents, (iii) give any notice or exercise any right or take
any action under any of the Indenture Documents, or (iv) submit or consent to
the submission of any dispute, difference or other matter arising under or in
respect of any of the Indenture Documents to arbitration thereunder. For
purposes of Section 4.02(e) hereof, this is the fourth paragraph following the
Habendum Clause.
The Owner Trustee hereby ratifies and confirms its obligations
under the Indenture Documents and does hereby agree that (except as permitted
herein) it will not take, or omit to take, any action, the taking or omission
of which might result in an alteration or impairment of any of the Indenture
Documents or of any of the rights created by any thereof or the assignment
hereunder.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excepted Payments and
Excepted Rights. Further, nothing in the Granting Clause or the preceding
paragraphs shall impair any of the rights of the Owner Trustee or the Owner
Participant under Section 5.10 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained in
the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of the other
Operative Documents and references to various Persons shall be deemed to be
references to and include their respective permitted successors and assigns.
8
<PAGE> 14
"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.
"AT Offshore" means Air Tara Hong Kong, Limited, a Cayman Islands
corporation, and its successors and permitted assigns under the Foreign
Financing Documents.
"Average Life Date" for each Equipment Note to be redeemed shall
be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Equipment
Note. "Remaining Weighted Average Life" of such Equipment Note, at the
redemption date of such Equipment Note, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity date
of such Equipment Note, by (ii) the number of days from and including
the redemption date to but excluding the scheduled payment date of such
principal installment; by (b) the then unpaid Principal Amount of such
Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq., as amended.
"BFE Bill of Sale" means the full warranty (as to title) bill of
sale covering the Buyer Furnished Equipment, transferring all right,
title and interest therein to the Owner Trustee.
"Business Day" means a day other than a Saturday, Sunday or a day
on which banks are required or authorized to close in either The City of
New York, New York or Hartford, Connecticut.
"Cash Collateral Account" means one or more Eligible Deposit
Accounts in the name of the Subordination Agent each maintained at the
Subordination Agent, into which all amounts drawn under one or more
Liquidity Facilities pursuant to Section 3.6(c) or 3.6(i) of the
Intercreditor Agreement shall be deposited.
"Code" means the Internal Revenue Code of 1986, as amended.
9
<PAGE> 15
"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 29, 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-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,
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<PAGE> 16
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."
"Escrow Agreement" means the Escrow Agreement dated as of
December 19, 1989 relating to the Aircraft among GPA Offshore, Foreign
Lessor, AT Offshore, the Owner Trustee and the Indenture Trustee, as
Escrow Agent, including the "Sales Documents" delivered thereunder
pursuant to the Deed of Consent of the Foreign Lessor dated December 20,
1994.
"Excepted Payments" means (i) any and all indemnity payments and
interest in respect thereof paid or payable in respect of the Owner
Participant, the partners 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, or any partner of 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, any partner 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 under Section 10 of the
Lease or by the Lessee or the Parent Guarantor under the Tax
Indemnification Agreement or the Amended and Restated Head Lease TIA (as
defined in the Refunding Agreement), as the case may be, (v) Transaction
Expenses paid or payable by the Lessee or the Parent Guarantor to the
Trust Company, the Owner Trustee, the Indenture Trustee or the Owner
Participant pursuant to Section 21 of the Refunding Agreement or the
Lease, (vi) any letter of credit contemplated by Section
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<PAGE> 17
8(l) of the Lease (including, without limitation, any replacement letter
of credit (the "Equity Collateral")) and any payment or proceeds of any
such Equity Collateral to the extent retained or applied as provided in
Section 8(l) of the Lease, (vii) any amount payable to the Owner
Participant by any transferee as the purchase price of the Owner
Participant's interest in the Trust Estate (or a portion thereof),
(viii) any amount payable to the Owner Trustee, the Trust Company, the
Owner Participant or any of their respective successors, permitted
assigns (and, in the case of a permitted assign of the Owner Participant
or any partner of the Owner Participant that is a partnership, the
partners of such partnership), directors, officers, employees, servants,
agents, subsidiaries, affiliates or shareholders attributable to the
period prior to or on the Restatement Date or under the Original
Participation Agreement, the Original Lease, the Parent Head Lease
Guaranty, the Sublease, the Amended and Restated Head Lease TIA or the
Amended and Restated Sublease TIA (as such terms are defined in the
Refunding Agreement) or Retained Head Lease Rights and Obligations (as
such term is defined in the Refunding Agreement), and (ix) subject to
the last sentence of Section 5.10 hereof, any and all rights of the
Owner Trustee, the Owner Participant or the Trust Company under the
Operative Documents, whether or not a Lease Event of Default, a Lease
Default, an Indenture Default or an Indenture Trustee Event has occurred
and is continuing, to demand, collect, sue for, give notices, make
determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner Participant
and the Owner Trustee under Section 5.10 of this Indenture, (ii) all
rights under the Equity Collateral to make a claim for, collect and
retain all amounts payable with respect to any Equity Collateral, (iii)
all rights of the Owner Participant, the Trust Company or the Owner
Trustee to compromise or waive any such right or modify, amend or waive
any provision of any Operative Document conferring such rights with
respect to Excepted Payments, and (iv) all rights of the Owner Trustee
to exercise any election or option, or to make any decision or
determination, or to give or receive any notice, consent, waiver or
approval with respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
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<PAGE> 18
"First CSA Assignment" means the First Conditional Sale Agreement
Assignment dated as of December 19, 1989 between the Original Lessee and
the Owner Trustee.
"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.
"Foreign Financing Documents" mean, collectively, the Hire
Purchase Agreement, the Hire Purchase Acceptance Certificate, the
Foreign Loan Agreement, the Foreign Security Agreement, the Foreign
Lease Agreement, the Lease Acceptance Certificate, the Foreign Hire
Purchase Consent, the Foreign Lease Consents, the Foreign Lease Charge,
the General Assumption Agreement, the Payment Assumption Agreement, the
Hire Purchase Assignment, the Foreign Lease Assignment, the Escrow
Agreement and the Foreign Power of Attorney.
"Foreign Hire Purchase Consent" means the Consent (1989 B) of the
Foreign Lessor, dated as of December 19, 1989, with respect to certain
matters contained in the Hire Purchase Assignment.
"Foreign Lease Agreement" means the Aircraft Lease Agreement
(1989 B) dated as of December 19, 1989 relating to the Aircraft between
the Foreign Lessor and GPA Offshore.
"Foreign Lease Assignment" means the Assignment of Lease
Agreement, of General Assumption Agreement and of Charge (1989 B), dated
as of December 19, 1989 relating to the Aircraft between GPA Offshore
and the Owner Trustee.
"Foreign Lease Charge" means the Charge (1989 B), dated as of
December 19, 1989 relating to the Aircraft between GPA Offshore and
Foreign Lessor which grants to GPA Offshore a security interest in the
proceeds of a sale of the Aircraft.
"Foreign Lease Consents" means (i) the Consent of the Foreign
Lessor, dated as of December 19, 1989, and (ii) the Deed of Consent
dated December 20, 1994 of the Foreign Lessor and its "Partners"
referred to therein, in each instance, relating to the Aircraft with
respect to certain matters contained in the Foreign Lease Assignment.
"Foreign Lender" means the Hong Kong branch of Algemene Bank
Nederland N.V., a banking institution organized and existing under the
laws of The Netherlands, and its successors and permitted assigns under
the Foreign Financing Documents.
"Foreign Lessor" means The Shamrock II Leasing Limited
Partnership, a limited partnership formed under the laws of
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<PAGE> 19
Hong Kong, and its successors and permitted assigns under the Foreign
Financing Documents.
"Foreign Loan Agreement" means the B Loan Agreement (1989), dated
as of December 19, 1989 relating to the Aircraft between Foreign Lessor
and Foreign Lender.
"Foreign Power of Attorney" means the irrevocable Power of
Attorney, dated as of December 20, 1994 relating to the Aircraft
executed and delivered by Foreign Lessor and naming each of GPA Offshore
and the Owner Trustee as its attorney-in-fact to sell the Aircraft upon
termination of the Foreign Lease Agreement.
"Foreign Security Agreement" means the B Security Agreement,
dated as of December 19, 1989 between Foreign Lessor and Foreign Lender.
"General Assumption Agreement" means the General Assumption
Agreement (1989 B) dated as of December 19, 1989 relating to the
Aircraft between Foreign Lessor, GPA Offshore and GPA Caymans.
"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 Caymans" means GPAG Caymans, Limited, a Cayman Islands
corporation, and its successors and permitted assigns under the Foreign
Financing Documents.
"GPA Offshore" means GPA HK-320-B, Limited, a Cayman Islands
corporation, and its successors and permitted assigns under the Foreign
Financing Documents.
"Hire Purchase Acceptance Certificate" means the Acceptance
Certificate dated December 29, 1989 executed and delivered by the
Foreign Lessor pursuant to the Hire Purchase Agreement.
"Hire Purchase Agreement" means the Hire Purchase Agreement (1989
B) dated as of December 19, 1989 relating to the Aircraft between the
Foreign Lessor and AT Offshore.
"Hire Purchase Assignment" means the Bill of Sale and HPA
Assignment [GPA 1989 BN-8], dated as of December 19, 1989 between AT
Offshore and the Owner Trustee.
"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.
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<PAGE> 20
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement (to the extent assigned to or for the benefit of
the Owner Trustee); the Purchase Agreement Warranty Assignment; the
Second Aircraft Warranty Bill of Sale; the BFE Bill of Sale; the Foreign
Lease Agreement; the Hire Purchase Agreement; the Hire Purchase
Acceptance Certificate; the Lease Acceptance Certificate; the Foreign
Hire Purchase Consent; the Foreign Lease Consents; the Foreign Power of
Attorney; the Escrow Agreement; the General Assumption Agreement; the
Foreign Lease Charge; the Foreign Lease Assignment; the First CSA
Assignment; the Second CSA Assignment; and the Hire Purchase 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 29, 1989,
which was recorded as one instrument by the FAA with the Original
Indenture, and Trust Indenture Supplement No. 2 dated the date hereof,
which is being filed for recordation as one instrument by the FAA with
this First Amended and Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
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<PAGE> 21
"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 supplemented by Lease Supplement No. 1 dated the
Delivery Date and Lease Supplement No. 2 dated December, 1994, and as
further assigned, amended, restated and supplemented by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-8] dated
as of the date hereof and Amended and Restated Aircraft Lease Agreement
[GPA 1989 BN-8] dated as of the date hereof and supplemented by Lease
Supplement [GPA 1989 BN-8] No. 3 dated the date hereof, which are being
filed for recordation with the FAA contemporaneously herewith.
"Lease Acceptance Certificate" means the Acceptance Certificate
dated December 29, 1989 executed by GPA Offshore pursuant to the Foreign
Lease Agreement.
"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
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<PAGE> 22
Equipment Notes then outstanding shall be held by the Owner Trustee
and/or the Owner Participant) or any Equipment Notes held by the Lessee
or any Affiliate of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date to
maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date (assuming
a 360-day year of twelve 30-day months) using a discount rate equal to
(i) in the case of Series A Equipment Notes and Series B Equipment
Notes, the Treasury Yield and (ii) in the case of Series C Equipment
Notes and Series D Equipment Notes, the Treasury Yield plus 0.75%
exceeds (b) the outstanding principal amount of such Equipment Note plus
accrued interest. For purposes of determining the Make-Whole Amount,
"Treasury Yield" at the time of determination with respect to any
Equipment Note means the interest rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities market 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.
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<PAGE> 23
"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 1989 BN-8] dated as of December 19, 1989, as supplemented
by Trust Indenture Supplement No. 1 dated December 29, 1989, which were
recorded as one instrument by the FAA on January 19, 1990 and assigned
Conveyance No. H68557.
"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-8] dated as of September 21, 1990, as
supplemented and amended to the date hereof, between the Original Head
Lessee in its capacity as sublessor thereunder and AWA in its capacity
as sublessee.
"Owner Participant" means ____________________, 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.
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<PAGE> 24
"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 Assumption Agreement" means the Payment Assumption
Agreement, dated as of December 19, 1989 between the Foreign Lessor, GPA
Caymans and Hollandsche Bank-Unie N.V., a banking institution organized
and existing under the laws of The Netherlands, and its successors and
assigns under the Foreign Financing Documents.
"Payment Date" means each January 2 and July 2, commencing on
July 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 Warranty Assignment" means the Purchase
Agreement Warranty Assignment [GPA 1989 BN-8], dated the Delivery Date,
between AT Offshore 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.
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<PAGE> 25
"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-
8] dated as of June __, 1997, 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 June __, 1997 or such other date agreed
to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date of
the filing with the FAA of Trust Indenture Supplement No. 2.
"Second Aircraft Warranty Bill of Sale" means the full warranty
(as to title) bill of sale covering the Aircraft (excluding all of the
Buyer Furnished Equipment to be covered by the BFE Bill of Sale)
executed by AT Offshore in favor of the Owner Trustee, dated the
Delivery Date.
"Second CSA Assignment" means the Second Conditional Sale
Agreement Assignment dated as of December 19, 1989 between the Owner
Trustee and AT Offshore.
"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
20
<PAGE> 26
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.
"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 a "United
States Person" as that term is defined in Section 7701(a)(30) of the
Code.
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<PAGE> 27
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-8]
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 N627AW
No.____________ Date: [________, 1997]
$___________________
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-8], dated as of December 19,
1989, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to
Fleet National Bank, as Subordination Agent under the Intercreditor Agreement,
or the registered assignee thereof, the principal sum of $_______ (the
"Principal Amount"), together with interest on the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Debt Rate indicated above. The Principal Amount of
this Equipment Note shall be payable in installments on the dates set forth in
Schedule I hereto equal to the corresponding percentage of the Principal Amount
of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest shall be due and payable in semiannual installments commencing on July
2, 1997, and thereafter on July 2 and January 2 of each year, to and including
___________, ____.
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<PAGE> 28
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and
if such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First Amended
and Restated Trust Indenture and Security Agreement [GPA 1989 BN-8], dated as
of June __, 1997, 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 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,
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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 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.
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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 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.
- --------------------
(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 a Series B, Series C or Series D
Equipment Note.
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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:
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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 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 July 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 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
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during which the same shall be overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment under any Equipment
Note becomes due and payable is not a Business Day then such payment shall not
be made on such scheduled date but shall be made on the next succeeding
Business Day and if such payment is made on such next succeeding Business Day,
no interest shall accrue on the amount of such payment during such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the
Liquidity Providers by the Subordination Agent under each Liquidity Facility
(as determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default (as defined below) under any Equipment
Note a fraction, the numerator of which is the aggregate principal
balance then outstanding of the Equipment Notes issued hereunder and the
denominator of which is the aggregate principal balance then outstanding
of
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all "Equipment Notes" issued under the Indentures under which there
exists a Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions
in paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued
under the Indentures. As used in this Section 2.02, "Net Interest and Related
Charges" means (as determined by the Subordination Agent in consultation with
the Liquidity Providers and notified to the Indenture Trustee except that the
Past Due Rate shall be determined by the Indenture Trustee and notified to the
Subordination Agent) the sum of (i) the amount, if any, by which interest
payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or
Downgrade Drawing (other than a Downgrade Drawing that is not an Applied
Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount
which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used
in this Section 2.02, "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal
or interest on a "Series D Equipment Note" issued under the Indentures which
has not been cured other than solely because of acceleration. For purposes of
Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment
Notes bearing the signatures of individuals who were at any time the proper
officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Equipment Notes or did not hold such
offices at the respective dates of such Equipment Notes. The Owner Trustee may
from time to time execute and deliver Equipment Notes with respect to the
Aircraft to the Indenture Trustee for authentication upon original issue and
such Equipment Notes shall thereupon be authenticated and delivered by the
Indenture Trustee upon the written request of the Owner
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<PAGE> 35
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 Person or Persons of any of
them, and (ii) none of the Trust Company, the Owner Participant, any partner of
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
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<PAGE> 36
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.
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)
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<PAGE> 37
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 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.
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(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
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
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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, except as otherwise expressly
provided herein, 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).
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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 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,
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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 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
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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, 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
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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 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.
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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.
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
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Section 4.02(g), (h) or (i) hereof, except as expressly provided in Articles II
and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied
as provided in Articles II and III hereof.
(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full and (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02, 3.03 or 3.04 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;
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(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 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
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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
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.
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(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 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;
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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 distribution,
shall be distributed to the Note Holders of Series B, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Principal Amount of all
Series B Equipment Notes held by each Holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series B Equipment Notes held
by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution;
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(iii) after giving effect to paragraph (ii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series C Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series C Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series C, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Principal Amount of all
Series C Equipment Notes held by each Holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series C Equipment Notes held
by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
(iv) after giving effect to paragraph (iii) above, so much of such
payments or amounts remaining as shall be required to pay in full the
aggregate unpaid Principal Amount of all Series D Equipment Notes, and
the accrued but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series D Equipment Notes
(other than Make-Whole Amount, if any) to the date of distribution,
shall be distributed to the Note Holders of Series D, and in case the
aggregate amount so to be distributed shall be insufficient to pay in
full as aforesaid, then ratably, without priority of one over the other,
in the proportion that the aggregate unpaid Principal Amount of all
Series D Equipment Notes held by each Holder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder (other than
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Principal Amount of all Series D Equipment Notes held
by all such Holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; and
fourth, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee for distribution pursuant
to the Trust Agreement and the Lease.
No Make-Whole Amount shall be due and payable on the Equipment
Notes as a consequence of the acceleration of the Equipment Notes.
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 and not otherwise provided for herein 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.
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(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
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
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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 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;
(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
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Owner Trustee under the Lease or any Foreign 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 Foreign Financing Documents, 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
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Corporate Trust Administration Department of the Trust Company or an
officer of the managing partner of the Owner Participant with
responsibility for or familiarity with the transactions contemplated
hereunder and under the other Operative Documents (or any Vice President
of the managing partner 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 (other than the representation made in Section
9(b)(8) thereof) or by any Person guaranteeing or supporting the
obligations of the Owner Participant under the Operative Documents 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)(10),
10 or 14 of the Refunding Agreement, or the disaffirmance or repudiation
by any Person that has guaranteed or may guarantee or support the
obligations of the Owner Participant under the Operative Documents; 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
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the Owner Participant contained in the Refunding Agreement or any
failure of any Person that has guaranteed or may guarantee or support
the obligations of the Owner Participant under the Operative Documents
to observe or perform any covenant or obligation of such Person
contained in any such guarantee or support agreement, which failure, in
any case and either individually or together with other then existing
failures, shall have a material adverse effect on the rights and
interests of the Indenture Trustee or any Note Holder and is not
remedied within a period of 45 calendar days following notice being
given to the Owner Trustee, the Owner Participant or such Person, as the
case may be, by the Indenture Trustee or a Majority in Interest of Note
Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant,
any of its partners, or any Person that has guaranteed or may guarantee
or support the obligations of the Owner Participant 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, any of its partners, or
any Person that has guaranteed or may guarantee or support the
obligations of the Owner Participant 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, any of its partners, 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
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Estate or the Owner Trustee with respect thereto (and not in its
individual capacity) or the Owner Participant, any of its partners, or
any Person that has guaranteed or may guarantee or support the
obligations of the Owner Participant 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 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
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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 thirty 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
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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 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
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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.
No Make-Whole Amount shall become payable on the Equipment Notes
as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to
such Note Holder and
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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 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,
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additions and improvements to and of the Trust Indenture Estate, as it may deem
proper (it being understood and agreed that the provisions hereof shall not be
construed so as to expand the obligations of the Lessee under the Lease,
including Section 16 thereof). In each such case, the Indenture Trustee shall
have the right to maintain, use, operate, store, lease, control or manage the
Trust Indenture Estate and to carry on the business (without limiting the
express provisions of Section 5.10 hereof) and to exercise all rights and
powers of the Owner Participant and the Owner Trustee relating to the Trust
Indenture Estate, as the Indenture Trustee shall deem best, including the right
to enter into any and all such agreements with respect to the maintenance,
insurance, use, operation, storage, leasing, control, management or disposition
of the Trust Indenture Estate or any part thereof as the Indenture Trustee may
determine; and the Indenture Trustee shall be entitled to collect and receive
directly all tolls, rents (including Rent), revenues, issues, income, products
and profits of the Trust Indenture Estate and every part thereof, except
Excepted Payments, without prejudice, however, to the right of the Indenture
Trustee under any provision of this Indenture to collect and receive all cash
held by, or required to be deposited with, the Indenture Trustee hereunder,
except Excepted Payments. The Indenture Trustee shall, pursuant to the
exercise of its remedies under this Article IV, to the extent permitted by
applicable law, be entitled to the appointment of a receiver for all or any
part of the Trust Indenture Estate, whether such receivership be incidental to
a proposed sale of the Trust Indenture Estate or otherwise, and the Owner
Trustee hereby consents to the appointment of such receiver and will not oppose
any such appointment. Such tolls, rents (including Rent), revenues, issues,
income, products and profits shall be applied to pay the expenses of the use,
operation, storage, leasing, control, management or disposition of the Trust
Indenture Estate and of conducting the business thereof, and of all
maintenance, repairs, replacements, alterations, additions and improvements,
and to make all payments which the Indenture Trustee may be required or may
elect to make, if any, for taxes, assessments, insurance or 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
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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 on
any Equipment Note then outstanding, or (ii) in respect of a covenant or
provision hereof which, under Article IX hereof, cannot be modified or amended
without the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes is held by one or more Persons which are not a "citizen of the
United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV
as a result of the occurrence of an Indenture Event of Default which is not a
Lease Event of Default, the Indenture Trustee shall make arrangements, if any,
as may be
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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 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
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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 (including, without limitation,
Section 15 of the Lease), 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
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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 such
discretionary action hereunder; provided, however, that if the Indenture
Trustee shall request written instructions pursuant to this Section 5.04, it
will use reasonable efforts to seek and obtain such instructions promptly so as
not unreasonably to delay the proposed action of Lessee in respect of which the
instructions are sought. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Article VII hereof or
any other Operative Document) promptly take such action as may be necessary to
duly discharge all Lenders' Liens on any part of the Trust Indenture Estate
attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding Agreement,
Indenture or Instructions. The Owner Trustee and the
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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;
(ii) a description of the Replacement Airframe (including the
manufacturer, model, FAA registration number (or other applicable
registration number) and manufacturer's serial number) to be received as
consideration for the Airframe to be released;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Airframe the Owner Trustee will hold legal title to such
Replacement Airframe free and clear of all Liens except Permitted Liens,
that such Replacement Airframe will on such date be in good operating
condition, and that such Replacement Airframe has been or, substantially
concurrently with such replacement, is in the
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process of being duly registered with the Owner Trustee as owner thereof
under the Federal Aviation Act or under the law then applicable to the
registration of the Aircraft and that an airworthiness certificate has
been duly issued under the Federal Aviation Act (or such other
applicable law) with respect to such Replacement Airframe, and that such
registration and certificate is in full force and effect, and the Lessee
or a Permitted Sublessee will have the full right and authority to use
such Replacement Airframe;
(iv) that the insurance required by Section 12 of the Lease is
in full force and effect with respect to such Replacement Airframe and
all premiums then due thereon have been paid in full;
(v) that the Replacement Airframe is of a like Airbus A320-231
model airframe with equivalent or better modification status delivered
by the Manufacturer not earlier than June 30, 1988;
(vi) that no Lease Event of Default has occurred and is
continuing or would result from the making and granting of the request
for release and the addition of a Replacement Airframe;
(vii) an appraisal prepared in accordance with the Appraisal
Procedure (as defined in the Lease) confirms that the Replacement
Airframe has a value, utility and remaining useful life at least equal
to that of the Airframe which suffered the Event of Loss assuming that
the same were maintained in accordance with the requirements of the
Lease whether or not they are in fact so maintained; and
(viii) that each of the conditions specified in Section 11(a) and
(c) of the Lease with respect to such Replacement Airframe have been
satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's name and serial number;
(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine to be released;
(iii) that on the date of the Indenture Supplement relating to
the Replacement Engine the Owner Trustee will hold title to such
Replacement Engine free and clear of all Liens except Permitted Liens,
that such Replacement Engine will on such date be in good operating
condition, and that 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) 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, and to the Foreign
Lease Agreement, if then in effect, and to the Hire Purchase Agreement, if then
in effect.
(4) With respect to a Replacement Airframe, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee
confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii)
hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the
Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this Indenture and
the Lease and, upon the basis of such application, the property so sold
or disposed of may be properly released from the Lien of this Indenture
and all conditions precedent herein provided for relating to such
release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s) have
been validly subjected to the Lien of this Indenture and covered by the
Lease, subjected to the Lien of
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the Foreign Lease Agreement, if then in effect, and subjected to the
Lien of the Hire Purchase Agreement, if then in effect, the instruments
subjecting such Replacement Airframe or Replacement Engine to the Lien
of this Indenture and the Lease, and subjecting to any relevant Assigned
Sublease and Sublease Assignment, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other
law then applicable to the registration of the Aircraft, and no further
action, filing or recording of any document is necessary in order to
establish and perfect, in the United States and, if the Aircraft is
registered outside the United States, in the jurisdiction of
registration, the legal title to such Replacement Airframe and/or
Replacement Engine and the Lien of this Indenture on such Replacement
Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as assignee
of the Owner Trustee's rights under the Lease) shall be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
Replacement Airframe and, if an Event of Loss with respect to the
Aircraft has occurred, the Replacement Engines to the same extent as
with respect to the Airframe and Engines then installed thereon prior to
such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at
the request of the Lessee execute an appropriate written instrument or
instruments to confirm the release of any Part from the Lien of this Indenture
as provided in this Section 5.06(b), but only upon receipt by the Indenture
Trustee of an Officers' Certificate of Lessee confirming such release is
authorized by the terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or Engine as contemplated
by Section 11 of the Lease, the Owner Trustee and the Indenture Trustee agree
for the benefit of the Note Holders and the Lessee, subject to fulfillment of
the conditions precedent and compliance by the Lessee with its obligations set
forth in Section 11 of the Lease, to execute and deliver the appropriate
instruments as contemplated by Section 5.06 hereof, and execute and deliver to
the Lessee (or any relevant Permitted Sublessee) an appropriate instrument
releasing the Airframe and/or Engine(s) being replaced from the Lien of this
Indenture.
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SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as contemplated by Section 11
of the Lease and Section 5.06 hereof, all provisions of this Indenture relating
to the Airframe or Engine(s) being replaced shall be applicable to such
Replacement Airframe or Replacement Engine(s) with the same force and effect as
if such Replacement Airframe or Replacement Engine(s) were the same airframe or
engine(s), as the case may be, as the Airframe or Engine(s) being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-
class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Note Holder shall affect the
sufficiency of such notice with respect to other Note Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Note Holders shall be filed with the Indenture Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this Indenture, including
the Granting Clause, but subject always to the final paragraph of this Section
5.10, the following rights shall be reserved to the Owner Trustee or Owner
Participant, as the case may be (as separate and independent rights) to the
extent described herein:
(a) the Owner Trustee or the Owner Participant may, without the
consent of the Indenture Trustee, demand, collect, sue for or otherwise
obtain all amounts included in Excepted Payments from the Lessee,
exercise any election or 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
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performance of the covenants of the Lessee under the Lease (or the
comparable provisions of any Assigned Sublease) relating to the
protection, maintenance, possession and use of the Aircraft; provided,
that the rights referred to in this clause (a) shall not be deemed to
include the exercise of any remedies provided for in Section 18 of the
Lease (or the comparable provisions of any Assigned Sublease) other than
the right to proceed by appropriate court action, either at law or in
equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent of
the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without the
consent of the Owner Trustee, which consent shall not be withheld if no
right or interest of the Owner Trustee or the Owner Participant shall be
materially diminished or impaired thereby, (A) enter into, execute and
deliver waivers or consents in respect of any of the provisions of the
Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve
any accountants, engineers, appraisers or counsel as satisfactory to
render services for or issue opinions to the Owner Trustee pursuant to
the Operative Documents (other than tax opinions issued to the Owner
Participant, any partner of the Owner Participant or the Owner Trustee);
provided that, whether or not an Indenture Event of Default has occurred
and is continuing, the Owner Trustee's consent shall be required with
respect to any waivers or consents in respect of any of the provisions
of Section 6, 12 or 16 of the Lease, or of any other Section of the
Lease to the extent such action shall affect (y) the amount or timing
of, or the right to enforce payment of any Excepted Payment or (z) the
amount or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of the
Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates, reports, filings, opinions of counsel and other documents
and all information which any thereof is permitted or required to give
or furnish to the Owner Trustee pursuant to
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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), the Foreign
Lease Agreement, the Foreign Lease Assignment, the Hire Purchase
Agreement, the Foreign Power of Attorney and the General Assumption
Agreement or other Foreign Financing Documents.
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,
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and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Indenture
Trustee and, if expressly required herein, to the Owner Trustee. Proof of
execution of any instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Sections 5.04,
5.05, 6.02 and 6.05) conclusive in favor of the Indenture Trustee and the Owner
Trustee if made in the manner provided in this Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far
as concerns such Equipment Note. Except as aforesaid any such action taken by
the Note Holder shall be conclusive and binding upon such Note Holder and upon
all future Note Holders and owners of such Equipment Note and of any Equipment
Notes issued in exchange or substitution therefor, irrespective of whether or
not any notation in regard thereto is made upon any such Equipment Note. Any
action taken by the Note Holders of the percentage in aggregate Principal
Amount of the Equipment Notes specified in this Indenture in connection with
such action shall be conclusively binding upon the Owner Trustee, the Indenture
Trustee and the Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be negligence), or as provided in the
fourth sentence of Section 2.04(a) hereof and in the last sentence of Section
5.04 hereof, and except for liabilities that may result, in the case of the
Trust Company, 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
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or in the Trust Agreement, the Refunding Agreement, or, in the case of the
Indenture Trustee, from the inaccuracy of any representation or warranty, or
failure to perform any covenant, of the Indenture Trustee made in its
individual capacity herein, in the Refunding Agreement or in any other
document. None of the Owner Participant, the Trust Company or the Indenture
Trustee shall be liable for any action or inaction of any other one of such
parties, except, in the case of the Owner Participant, for any action or
omission of the Owner Trustee performed or omitted on the instructions of the
Owner Participant. The Owner Trustee shall not be deemed a trustee for the
Note Holders for any purpose.
SECTION 6.02. Absence of Duties. In the case of the Indenture
Trustee, except in accordance with written instructions furnished pursuant to
Section 5.01, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the
case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01
hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the
Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the
Aircraft, whether or not the Lessee shall be in default with respect thereto,
(iii) to see to the payment or discharge of any Lien of any kind against any
part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify
or inquire into the failure to receive any financial statements of the Lessee
or (v) to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE
TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED
TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION
5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
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 Hire Purchase
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Agreement, the Hire Purchase Assignment, the Foreign Lease Agreement, the
Foreign Lease Assignment, the First CSA Assignment, and the Second Aircraft
Warranty Bill of Sale subject to the rights of the parties to the Indenture
Documents and (ii) the Aircraft shall be free and clear of Lessor's Liens
attributable to the Trust Company. Neither the Trust Company nor the Indenture
Trustee makes or shall be deemed to have made any representation or warranty as
to the validity, legality or enforceability of this Indenture, the Trust
Agreement, the Equipment Notes or any Indenture Documents or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Trust Company and the Indenture Trustee
in its individual capacity or as Indenture Trustee made under this Indenture or
in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys
paid to or retained by the Indenture Trustee pursuant to any provision hereof
and not then required to be distributed to any Note Holder, the Lessee or the
Owner Trustee as provided in Article III hereof need not be segregated in any
manner except to the extent required by law, and may be deposited under such
general conditions as may be prescribed by law, and the Indenture Trustee shall
not (except as otherwise provided in Section 3.07 hereof) be liable for any
interest thereon; provided that any payments received or applied hereunder by
the Indenture Trustee shall be accounted for by the Indenture Trustee so that
any portion thereof paid or applied pursuant hereto shall be identifiable as to
the source thereof.
SECTION 6.05. Reliance; Agents; Advice of Counsel. Neither the
Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee and the Indenture Trustee may accept a copy of a
resolution of the Board of Directors of any party to the Refunding Agreement,
certified by the Secretary or an Assistant Secretary thereof as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted and that the same is in full force and effect. As to the
aggregate unpaid Principal Amount of Equipment Notes outstanding 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
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certificate, the Owner Trustee and the Indenture Trustee shall be under a duty
to examine the same to determine whether or not it conforms to the requirements
of this Indenture. The Indenture Trustee shall assume, and shall be fully
protected in assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Indenture and to take all action to be taken by it
pursuant to the provisions hereof, and shall not inquire into the authorization
of the Owner Trustee with respect thereto. In the administration of the trusts
hereunder, the Owner Trustee and the Indenture Trustee each may execute any of
the trusts or powers hereof and perform its powers and duties hereunder
directly or (except in the case of the Indenture Trustee's obligations under
the third sentence of Section 2.04(a)) through agents or attorneys and shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care hereunder. The Indenture Trustee
may, at the expense of the Trust Indenture Estate, consult with counsel,
accountants and other skilled Persons to be selected and retained by it, and
the Owner Trustee and the Indenture Trustee shall not be liable for anything
done, suffered or omitted in good faith by them in accordance with the written
advice or written opinion of any such counsel, accountants or other skilled
Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the
extent permitted by applicable law) be limited by any provision of law in
regard to the compensation of a trustee of an express trust), including
expenses, advances and disbursements, for all services rendered hereunder, and
shall have a first priority claim (prior to the Note Holders) on the Trust
Indenture Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by the Lessee, and shall have the right to use
or apply any moneys held by it hereunder in the Trust Indenture Estate toward
such payments. The Indenture Trustee agrees that it shall have no right
against any Note Holder or the Owner Participant for any fee as compensation
for its services as trustee under this Indenture.
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
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documents as may be specified in such request and as are necessary or desirable
to perfect, preserve or protect the mortgage, security interests and
assignments created or intended to be created hereby, or to obtain for the
Indenture Trustee the full benefit of the specific rights and powers herein
granted, including, without limitation, the execution and delivery of Uniform
Commercial Code financing statements and continuation statements with respect
thereto, or similar instruments relating to the perfection of the mortgage,
security interests or assignments created or intended to be created hereby.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as
Indenture Trustee, and its successors, permitted assigns, agents and servants
solely from the Trust Estate, from and against any and all liabilities,
obligations, losses, damages, penalties, taxes (excluding any taxes payable by
the Indenture Trustee on or measured by any compensation received by the
Indenture Trustee for its services under this Indenture), claims, actions,
suits, and reasonable out-of-pocket costs, expenses or disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Indenture Trustee (in its
individual capacity and as trustee) from and after the Restatement Date
(whether or not also agreed to be indemnified against by any other Person under
any other document) in any way relating to or arising out of this Indenture,
the Trust Agreement, the Equipment Notes, the other Indenture Documents or the
enforcement of any of the terms of any thereof, or in any way relating to or
arising out of the manufacture, purchase, 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
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(iv) as otherwise excluded by the terms of Sections 10(b) and 13 of the Lease
from the Lessee's indemnities to the Indenture Trustee, in its individual
capacity and as Indenture Trustee, and its successors, permitted assigns,
agents and servants, thereunder; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Section 7.01
for any amount indemnified against by the Lessee under the Lease without first
(but only to the extent not stayed or otherwise prevented by operation of law)
making demand on the Lessee for payment of such amount. The Indenture Trustee
shall notify the Owner Trustee and the Lessee promptly of any claim for which
it may seek indemnity. The Lessee shall be entitled to defend any claim by the
Indenture Trustee to the extent provided in Section 10 or 13 of the Lease. The
Indenture Trustee shall be entitled to indemnification from the Trust Indenture
Estate for any liability, obligation, loss, damage, penalty, claim, action,
suit, cost, expense or disbursement indemnified against pursuant to this
Section 7.01 to the extent not reimbursed by the Lessee or others, but without
releasing any of them from their respective agreements of reimbursement; and to
secure the same the Indenture Trustee shall have a prior Lien on the Trust
Indenture Estate. The indemnities contained in this Section 7.01 shall survive
the termination of this Indenture.
SECTION 7.02. Exculpation and Release of Liability. Without in
any way affecting the limitations on liability set forth in the Operative
Documents, the Indenture Trustee, and each Note Holder by accepting any
Equipment Note hereunder, hereby acknowledge and agree that none of the Trust
Company, the Owner Participant or any director, officer, employee, stockholder,
partner, 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.
(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
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shall also be a bank or trust company having a combined capital and surplus of
at least $200,000,000 if there be such an institution willing, able and legally
qualified to perform the duties of the Indenture Trustee hereunder upon
reasonable or customary terms.
(d) Any corporation into which the Indenture Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Indenture
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be the Indenture
Trustee under this Indenture without further act. Notwithstanding the
foregoing, upon the request of the Owner Trustee or the Lessee, any such
successor corporation referred to in this Section 8.02(d) shall deliver to the
Owner Trustee and the Lessee an instrument confirming its status as the
Indenture Trustee hereunder and under the other Indenture Documents.
SECTION 8.03. Appointment of Separate Trustees. (a) At any
time or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Indenture Estate may at the time be
located or in which any action of the Indenture Trustee may be required to be
performed or taken, the Indenture Trustee, by an instrument in writing signed
by it, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Indenture
Trustee, of all or any part of the Trust Indenture Estate to the full extent
that local law makes it necessary for such separate trustee or separate
trustees or co-trustee acting jointly with the Indenture Trustee to act.
(b) The Indenture Trustee and, at the request of the Indenture
Trustee, the Owner Trustee, shall execute, acknowledge and deliver all such
instruments as may be required by the legal requirements of any jurisdiction or
by any such separate trustee or separate trustees or co-trustee for the purpose
of more fully confirming such title, rights or duties to such separate trustee
or separate trustees or co-trustee. Upon the acceptance in writing of such
appointment by any such separate trustee or separate trustees or co-trustee,
it, he, she or they shall be vested with such title to the Trust Indenture
Estate or any part thereof, and with such rights and duties, as shall be
specified in the instrument of appointment, jointly with the Indenture Trustee
(except insofar as local law makes it necessary for any such separate trustee
or separate trustees to act alone) subject to all the terms of this Indenture.
Any separate trustee or 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
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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
(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 any of the Foreign Financing
Documents, or execute and deliver any written waiver or modification of, or
consent under, the terms of the Lease or any of the Foreign Financing
Documents, unless such supplement, amendment, waiver, modification or consent
is consented to in writing by the Indenture Trustee acting on instructions of a
Majority in Interest of Note Holders. Anything to the contrary contained in
this Section 9.01 notwithstanding, without the necessity of the consent of any
of the Note Holders or (as respects clauses (i) and (ii) below) the Indenture
Trustee, (i) any Excepted Rights or Excepted Payments payable to the Owner
Trustee or Owner Participant may be modified, amended, changed or waived in
such manner as shall be agreed to by the Owner Participant and Lessee, (ii) the
Owner Trustee and Lessee may, so long as no Indenture Event of Default has
occurred and is continuing, enter into amendments of or additions to the Lease
to modify Sections 6(d), 9 and 16 and Exhibits B and E (except to the extent
that such amendment would adversely affect the rights or exercise of remedies
under Section 18 of the Lease) so long as such amendments, modifications and
changes do not and would not (A) affect the time of, or reduce the amount of,
Basic Rent or Stipulated Loss Value payments until after the payment in full of
all Secured Obligations, (B) impair the Lien of this Indenture, (C) adversely
affect the value, utility or useful life of the Aircraft or any Engine or (D)
otherwise adversely affect the Note Holders in any material respect and (iii)
the Lessee may effect the re-registration of the Aircraft in accordance with
but always subject to the terms and conditions applicable thereto specified in
Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the
Indenture Trustee may approve any Permitted Sublessee as provided in clause (c)
of the definition of such term set forth in the Lease and may exercise the
rights of the Indenture Trustee under Section 15 of the Refunding Agreement.
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For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way
the rights of the Owner Trustee and/or the Owner Participant under Section
5.10(d) to exercise certain rights and powers under the Lease to the exclusion
of the Indenture Trustee and any Note Holder and without the consent of the
Indenture Trustee or any Note Holder.
The Indenture Trustee is hereby authorized to join in the
execution of any supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Indenture Trustee shall not be obligated to enter into any
such supplemental indenture which adversely affects the Indenture Trustee's own
rights, duties or immunities under this Indenture or otherwise, whether in its
official or individual capacity.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed without the consent of the Note Holders
notwithstanding any of the provisions of this Section 9.01.
(b) Without limiting the provisions of Section 9.01(a) hereof
and subject to Sections 5.10(b) and 5.10(d) hereof, the Indenture Trustee
agrees with the Note Holders that it shall not enter into any amendment, waiver
or modification of, supplement or consent to this Indenture, the Lease, the
Refunding Agreement or the other Indenture Documents, any of the Foreign
Financing Documents or any other agreement included in the Trust Indenture
Estate, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by a Majority in Interest of Note Holders, or does not
adversely affect the Note Holders in any material respect. Upon the written
request of a Majority in Interest of Note Holders, the Indenture Trustee shall
from time to time enter into any such supplement or amendment, or execute and
deliver any such waiver, modification or consent, as may be specified in such
request and as may be (in the case of any such amendment, supplement or
modification), to the extent such agreement is required, agreed to by the Owner
Trustee and Lessee or, as may be appropriate, the Manufacturer; provided,
however, that, without the consent of each Holder of an affected Equipment Note
then outstanding and of each Liquidity Provider, no such amendment of or
supplement to this Indenture, the Lease, the Refunding Agreement or any other
Indenture Document or waiver or modification of the terms of, or consent under,
any thereof, shall (i) modify any of the provisions of this Section 9.01, or of
Section 2.02, 2.10, 2.13, 4.02, 4.04(e), 5.06 or 5.10 hereof, Section 17
(except to add a Lease Event of Default) of the Lease, the definitions of
"Indenture Event of Default", "Indenture Default", "Indenture Trustee Event",
"Lease Event of Default", "Lease Default", "Majority in Interest of Note
Holders", "Make-Whole Amount" or "Note Holder", or the percentage of Note
Holders required to take or approve any action hereunder, (ii) reduce the
amount, or change the time of payment or method
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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 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
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<PAGE> 87
(vii) to include on the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof
shall adversely affect the Lessee in any material respect or impose upon the
Lessee any additional indemnification obligations.
SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and 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
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<PAGE> 88
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 Foreign Lease Agreement or the Hire
Purchase Agreement.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and the Owner Trustee
shall direct the Indenture Trustee to execute and deliver to or as directed in
writing by the Owner Trustee, an appropriate instrument evidencing the
discharge of such Lien and the termination of such security interest in the
Aircraft and release of the Indenture Documents from the assignment and pledge
thereof hereunder, and the
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<PAGE> 89
Indenture Trustee shall execute and deliver such instrument as aforesaid and,
at the Owner Trustee's expense, will execute and deliver such other instruments
or documents as may be reasonably requested by the Owner Trustee to give effect
to such discharge, termination and release; provided, however, that this
Indenture and the trusts created hereby shall earlier terminate and this
Indenture shall be of no further force or effect as expressly provided pursuant
to Article X hereof or upon any sale or other final disposition by the
Indenture Trustee of all property part of the Trust Indenture Estate and the
final distribution by the Indenture Trustee of all moneys or other property or
proceeds constituting part of the Trust Indenture Estate in accordance with the
terms hereof. Except as aforesaid otherwise provided, this Indenture and the
trusts created hereby shall continue in full force and effect in accordance
with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding.
Any sale or other conveyance of the Aircraft by the Indenture Trustee made
pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Indenture Trustee.
SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. No Action Contrary to Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this 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
84
<PAGE> 90
right of the Lessee to possession and use and quiet enjoyment of the Aircraft,
except in accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, directions, consents,
waivers or documents required or permitted by the terms of this Indenture shall
be in English and in writing, mailed by first-class registered or certified
mail, postage prepaid, or by confirmed telex or telecopy, and (i) if to the
Owner Trustee, addressed to it at its office at Rodney Square North,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration
Department (telex: 835437; answerback: WILMTR; telecopy: (302) 651-8464/8882),
with a copy to the Owner Participant at its address set forth in the Refunding
Agreement, (ii) if to the Indenture Trustee, addressed to it at its office at
450 West 33rd Street, 15th Floor, New York, New York 10001, Attention:
Corporate Trust Department (telecopy: (212) 946-8160) or (iii) if to the Owner
Participant, the Lessee or any Note Holder, addressed to such party at such
address as such party shall have furnished by notice to the Owner Trustee and
the Indenture Trustee, or, until an address is so furnished, addressed to the
address of such party (if any) set forth on the signature pages to the
Refunding Agreement or in the Register. Whenever any notice in writing is
required to be given by the Owner Trustee or the Indenture Trustee or any Note
Holder to any of the other of them, such notice shall be deemed and such
requirement satisfied when such notice is received. Any party hereto may
change the address to which notices to such party will be sent by giving notice
of such change to the other parties to this Indenture.
SECTION 10.07. Severability. Any provision of this Indenture
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 10.08. No Oral Modifications or Continuing Waivers. No
terms or provisions of this Indenture or the Equipment Notes may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party or other Person against whom enforcement of the change,
waiver, discharge or termination is sought; and any waiver of the terms 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
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<PAGE> 91
or action by any Note Holder shall bind the successors and assigns of such Note
Holder. This Indenture and the Trust Indenture Estate shall not be affected by
any amendment or supplement to the Trust Agreement or by any other action taken
under or in respect of the Trust Agreement, except that each reference in this
Indenture to the Trust Agreement shall mean the Trust Agreement as amended and
supplemented from time to time to the extent permitted hereby and thereby.
Each Note Holder by its acceptance of an Equipment Note agrees to be bound by
this Indenture and all provisions of the Refunding Agreement applicable to a
Note Holder.
SECTION 10.10. Headings. The headings of the various Articles
and Sections herein and in the table of contents hereto are for the convenience
of reference only and shall not define or limit any of the terms or provisions
hereof.
SECTION 10.11. Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Indenture Trustee, the
Owner Trustee, the Owner Participant, any Note Holder or any bank or other
Affiliate of any of them may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with the
Lessee or any Permitted Sublessee fully to the same extent as if this Indenture
were not in effect, including without limitation the making of loans or other
extensions of credit to the Lessee for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
SECTION 10.12. Governing Law; Counterpart Form. THIS INDENTURE
AND THE EQUIPMENT NOTES ISSUED HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Indenture may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 10.13. Section 1110. It is the intention of the parties
that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as
assignee of the Owner Trustee's rights hereunder), shall be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the right to
take possession of the Aircraft, Airframe, Engines and Parts as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor, and in any instance where more than one construction is
possible of the terms and conditions hereof or of any other pertinent Operative
Document, each such party agrees that a construction which would preserve such
benefits shall control over any construction which would not preserve such
benefits.
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<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:
---------------------------------------
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as expressly
provided herein, but solely as Indenture
Trustee
By:
---------------------------------------
Title:
87
<PAGE> 93
EXHIBIT A
to
First Amended and Restated
Trust Indenture and Security Agreement
[GPA 1989 BN-8]
TRUST INDENTURE SUPPLEMENT NO. __________
[GPA 1989 BN-8]
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-8] 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-
8] dated as of December 19, 1989, as amended and restated as of June __, 1997
(as so amended and restated, the "Indenture") between the Owner Trustee and The
Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to
Manufacturers Hanover Trust Company), as Indenture Trustee (the "Indenture
Trustee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof which shall particularly describe the Aircraft
(such term and other defined terms in the Indenture being herein used with the
same meanings) and any Replacement Airframe or Replacement Engine included in
the Trust Indenture Estate, and shall specifically mortgage such Aircraft,
Replacement Airframe or Replacement Engine, as the case may be, to the
Indenture Trustee.
WHEREAS(1), the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated December 29, 1989 subjected to the Lien of
such Original Indenture the airframe and engines described therein, which
Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded
with the Federal Aviation Administration on January 19, 1990, as one document
and assigned Conveyance No. H68557.
WHEREAS(2), the Indenture relates to the Airframe and Engines
described below and a counterpart of the Indenture is attached hereto and made
a part hereof and this Indenture Supplement, together with such counterpart of
the Indenture, is being filed for recordation on the date hereof with the
Federal Aviation Administration as one document.
- --------------------
(1) This recital to be included in the each Indenture Supplement.
(2) This recital is to be included only in Indenture Supplement No. 2.
<PAGE> 94
WHEREAS(3), the Owner Trustee has, as provided in the Indenture,
heretofore executed and delivered to the Indenture Trustee[(4)] Indenture
Supplement(s) for the purpose of specifically subjecting to the Lien of the
Indenture certain airframes and/or engines therein described, which Indenture
Supplement(s) is (are) dated and has (have) been duly recorded with the Federal
Aviation Administration as set forth below, to wit:
Date Recordation Date FAA Document No.
NOW, THEREFORE, This Supplement Witnesseth, that, to secure the
prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to, all Equipment Notes from time
to time outstanding under the Indenture and the performance and observance by
the Owner Trustee of all the agreements, covenants and provisions contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the
Owner Participant and the Lessee in each case to the Note Holders and for the
uses and purposes and subject to the terms and provisions of the Indenture, and
in consideration of the premises and of the covenants contained in the
Indenture, and of the acceptance of the Equipment Notes by the Holders thereof,
and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or
before the delivery of the Indenture, the receipt whereof is hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors and assigns, for the security and benefit of
the Note Holders from time to time, in the trust created by the Indenture, a
first priority security interest in and mortgage Lien on all estate, right,
title and interest of the Owner Trustee in, to and under the following
described property:
- --------------------
(3) This recital not to be included in Indenture Supplement No. 2.
(4) Insert appropriate number.
2
<PAGE> 95
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, 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-8]
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
3
<PAGE> 96
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.
4
<PAGE> 97
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:
5
<PAGE> 98
SCHEDULE I
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- -------- ---------
<S> <C> <C> <C>
Series A . . . . . . . . . . . $
Series B . . . . . . . . . . . $
Series C . . . . . . . . . . . $
Series D . . . . . . . . . . . $
</TABLE>
<PAGE> 99
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N627AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 100
SERIES B
Aircraft: N627AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 101
SERIES C
Aircraft: N627AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 102
SERIES D
Aircraft: N627AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 103
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1A, dated June __, 1997.
2. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1B, dated June __, 1997.
3. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1C, dated June __, 1997.
4. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1D, dated June __, 1997.
<PAGE> 1
Exhibit 4.19
-------------------------------------------------------------------
FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-11]
Dated as of June __, 1997
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. 81
Registration No. N632AW
Leased by America West Airlines, Inc.
-------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . 3
HABENDUM CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 8
SECTION 1.01. Special Definitions . . . . . . . . . . . . . . . . 8
ARTICLE II
THE EQUIPMENT NOTES . . . . . . . . . . . . 19
SECTION 2.01. Form of Equipment Notes . . . . . . . . . . . . . . 19
SECTION 2.02. Issuance and Terms of Equipment Notes . . . . . . . 24
SECTION 2.03. Payments from Trust Indenture Estate
Only . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.04. Method of Payment. . . . . . . . . . . . . . . . . . 28
SECTION 2.05. Application of Payments . . . . . . . . . . . . . . 31
SECTION 2.06. Termination of Interest in Trust
Indenture Estate . . . . . . . . . . . . . . . . . 31
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes . . . . . . . . . . . . . . . . . 32
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes . . . . . . . . . . . . . . . . . 33
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation . . . . . . . . . . . . . . . . . . . 34
SECTION 2.10. Mandatory Redemptions of Equipment
Notes . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.11. Redemptions; Notice of Redemption. . . . . . . . . . 34
SECTION 2.12. Option to Purchase Equipment Notes . . . . . . . . . 35
SECTION 2.13. Subordination. . . . . . . . . . . . . . . . . . . . 36
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE . . . . . . . 37
SECTION 3.01. Certain Rent Distributions . . . . . . . . . . . . . 37
SECTION 3.02. Event of Loss and Replacement . . . . . . . . . . . 38
SECTION 3.03. Payment After Indenture Event of
Default, etc . . . . . . . . . . . . . . . . . . . 40
SECTION 3.04. Certain Payments . . . . . . . . . . . . . . . . . . 42
SECTION 3.05. Other Payments . . . . . . . . . . . . . . . . . . . 43
SECTION 3.06. Payments to Owner Trustee . . . . . . . . . . . . . 43
SECTION 3.07. Investment of Amounts Held by Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
i
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ARTICLE IV
COVENANTS OF TRUST COMPANY AND OWNER
TRUSTEE; INDENTURE EVENTS OF DEFAULT;
REMEDIES OF INDENTURE TRUSTEE . . . . . . . . . . 44
SECTION 4.01. Covenants of Trust Company and Owner
Trustee . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.02. Indenture Events of Default . . . . . . . . . . . . 45
SECTION 4.03. Certain Rights . . . . . . . . . . . . . . . . . . . 48
SECTION 4.04. Remedies . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.05. Return of the Aircraft, etc . . . . . . . . . . . . 53
SECTION 4.06. Remedies Cumulative . . . . . . . . . . . . . . . . 55
SECTION 4.07. Discontinuance of Proceedings . . . . . . . . . . . 55
SECTION 4.08. Waiver of Past Indenture Defaults . . . . . . . . . 55
SECTION 4.09. Exercise of Remedies by Foreign Note
Holders . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE . . . . . . . . . 56
SECTION 5.01. Notice of Indenture Event of Default . . . . . . . . 56
SECTION 5.02. Action Upon Instructions . . . . . . . . . . . . . . 57
SECTION 5.03. Indemnification . . . . . . . . . . . . . . . . . . 58
SECTION 5.04. No Duties Except as Specified in
Indenture or Instructions . . . . . . . . . . . . 58
SECTION 5.05. No Action Except Under Lease, Refunding
Agreement, Indenture or Instructions . . . . . . . 59
SECTION 5.06. Replacement Airframes, Replacement
Engines and Replacement Parts . . . . . . . . . . 59
SECTION 5.07. Indenture Supplements for Replacements . . . . . . . 62
SECTION 5.08. Effect of Replacement . . . . . . . . . . . . . . . 63
SECTION 5.09. Notices, etc. . . . . . . . . . . . . . . . . . . . 63
SECTION 5.10. Certain Rights of Owner Trustee and
Owner Participant . . . . . . . . . . . . . . . . 63
SECTION 5.11. Evidence of Action Taken by Note Holder . . . . . . 65
SECTION 5.12. Right of Revocation of Action Taken . . . . . . . . 66
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE . . . . . . 66
SECTION 6.01. Acceptance of Trusts and Duties . . . . . . . . . . 66
SECTION 6.02. Absence of Duties . . . . . . . . . . . . . . . . . 67
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents . . . . . . . . . . . . . . 67
SECTION 6.04. No Segregation of Moneys; No Interest . . . . . . . 68
SECTION 6.05. Reliance; Agents; Advice of Counsel . . . . . . . . 68
SECTION 6.06. Capacity in Which Acting . . . . . . . . . . . . . . 69
SECTION 6.07. Compensation . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.08. May Become Note Holder . . . . . . . . . . . . . . . 69
SECTION 6.09. Further Assurances; Financing
Statements . . . . . . . . . . . . . . . . . . . . 69
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ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE . . . . 70
SECTION 7.01. Scope of Indemnification . . . . . . . . . . . . . . 70
SECTION 7.02. Exculpation and Release of Liability . . . . . . . . 71
ARTICLE VIII
SUCCESSOR TRUSTEES AND SEPARATE TRUSTEES . . . . . . . 71
SECTION 8.01. Notice of Successor Owner Trustee . . . . . . . . . 71
SECTION 8.02. Resignation and Removal of Indenture
Trustee; Appointment of Successor . . . . . . . . 71
SECTION 8.03. Appointment of Separate Trustees . . . . . . . . . . 73
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS . . . . . . . . . . 75
SECTION 9.01. Lease Amendments and Supplemental
Indentures . . . . . . . . . . . . . . . . . . . . 75
SECTION 9.02. Effect of Supplemental Indenture . . . . . . . . . . 77
SECTION 9.03. Documents to Be Given to Trustee . . . . . . . . . . 78
SECTION 9.04. Notation on Notes in Respect of
Supplemental Indentures . . . . . . . . . . . . . 78
SECTION 9.05. Trustees Protected . . . . . . . . . . . . . . . . . 78
SECTION 9.06. Documents Mailed to Note Holders . . . . . . . . . . 78
SECTION 9.07. No Request Necessary for Lease
Supplement or Indenture Supplement . . . . . . . . 79
SECTION 9.08. Notices to Liquidity Provider . . . . . . . . . . . 79
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . 79
SECTION 10.01. Termination of Indenture . . . . . . . . . . . . . 79
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders . . . . . . . . . . . . . 79
SECTION 10.03. Sale of Aircraft by Indenture Trustee
is Binding . . . . . . . . . . . . . . . . . . . 80
SECTION 10.04. Indenture for Benefit of Owner Trustee,
Indenture Trustee, Owner Participant,
Lessee and Note Holders . . . . . . . . . . . . . 80
SECTION 10.05. No Action Contrary to Lessee's Rights
Under the Lease . . . . . . . . . . . . . . . . . 80
SECTION 10.06. Notices . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 10.07. Severability . . . . . . . . . . . . . . . . . . . 81
SECTION 10.08. No Oral Modifications or Continuing
Waivers . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10.09. Successors and Assigns . . . . . . . . . . . . . . 81
SECTION 10.10. Headings . . . . . . . . . . . . . . . . . . . . . 81
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SECTION 10.11. Normal Commercial Relations . . . . . . . . . . . . 81
SECTION 10.12. Governing Law; Counterpart Form . . . . . . . . . . 82
SECTION 10.13. Section 1110 . . . . . . . . . . . . . . . . . . . 82
EXHIBIT A - Form of Trust Indenture Supplement
SCHEDULE I - Equipment Notes Amortization
SCHEDULE II - Pass Through Trust Agreements
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FIRST AMENDED AND RESTATED
TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-11]
FIRST AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT
[GPA 1989 BN-11] (this "First Amended and Restated Indenture" or this
"Indenture") dated as of June __, 1997, 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-11] dated as of December 19,
1989, as supplemented by Trust Agreement Supplement [GPA 1989 BN-11] No. 1
dated December 29, 1989, and as further supplemented by Trust Agreement
Supplement [GPA 1989 BN-11] No. 2 dated the date hereof (as amended, assigned,
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-11] dated as of
December 19, 1989, as supplemented by Trust Indenture Supplement No. 1 dated
December 29, 1989, which were recorded by the Federal Aviation Administration
on January 3, 1990 as one instrument and assigned Conveyance No. V78689 (as so
supplemented, the "Original Indenture"), (ii) the Owner Trustee and the
Original Head Lessee entered into the Aircraft Lease Agreement [GPA 1989 BN-11]
dated as of December 19, 1989, as supplemented by Lease Supplement [GPA 1989
BN-11] No. 1 dated December 29, 1989, which were recorded by the Federal
Aviation Administration on January 3, 1990 as one instrument and assigned
Conveyance No. V78690 and as further supplemented by Lease Supplement [GPA 1989
BN-11] No. 2 dated
<PAGE> 7
January 5, 1995, which was recorded by the Federal Aviation Administration on
March 9, 1995 and assigned Conveyance No. DD007547 (collectively, as so
supplemented, the "Original Lease") and (iii) pursuant to the Original
Indenture, the Owner Trustee issued and sold to the Lenders (as defined in the
Original Indenture) the Original Loan Certificates;
WHEREAS, the parties have agreed to (i) assign, amend and restate
the Original Lease pursuant to Assignment and Amendment No. 1 and Sublease
Termination Agreement [GPA 1989 BN-11] dated as of the date hereof among the
Original Head Lessee, as assignor, and the Original Sublessee, as assignee, the
Owner Trustee and the Indenture Trustee and the Amended and Restated Aircraft
Lease Agreement [GPA 1989 BN-11] dated as of the date hereof between the Owner
Trustee and the Lessee (as so assigned, amended and restated, the "Amended and
Restated Lease" or the "Lease") and to enter into Lease Supplement No. 3 and
(ii) cause the implementation of the Refinancing Transaction pursuant to which,
among other things, the Original Loan Certificates issued pursuant to the
Original Indenture shall be prepaid and new Equipment Notes shall be issued to
the Pass Through Trustees (or their designee);
WHEREAS, in light of the foregoing and in anticipation of the
Refinancing Transaction, the parties desire by this First Amended and Restated
Indenture, among other things, (i) to amend and restate in its entirety the
Original Indenture, (ii) to provide for the issuance by the Owner Trustee of
the Equipment Notes and (iii) to provide for the assignment, mortgage and
pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust
Indenture Estate hereunder, among other things, of certain of the Owner
Trustee's estate, right, title and interest in and to the Aircraft and, except
as hereinafter expressly provided, all of the Owner Trustee's right, title and
interest in, to and under the Lease (as amended and restated to date and as the
same may at any time and from time to time be further amended, restated or
otherwise modified in accordance with the terms thereof and hereof) and all
payments and other amounts received hereunder or thereunder in accordance with
the terms hereof or thereof, as security for, among other things, the Owner
Trustee's obligations to the Indenture Trustee, for the ratable benefit and
security of the Note Holders, subject to Section 2.13 and Article III hereof;
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;
2
<PAGE> 8
GRANTING CLAUSE
NOW, THEREFORE, THIS FIRST AMENDED AND RESTATED TRUST INDENTURE
AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the
Principal Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to time outstanding
hereunder and the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Refunding
Agreement and the Equipment Notes, for the benefit of the Note Holders, and the
prompt payment of any and all amounts from time to time owing hereunder and
under the Refunding Agreement by the Owner Trustee, the Owner Participant and
the Lessee to the Note Holders and for the uses and purposes and subject to the
terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the Equipment Notes by the
Holders thereof, and of the sum of $1 paid to the Owner Trustee by the
Indenture Trustee at or before the delivery hereof, the receipt whereof is
hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors and assigns, for the security and benefit of
the Note Holders from time to time, a security interest in and mortgage Lien on
all estate, right, title and interest of the Owner Trustee in, to and under the
following described property, rights, interests and privileges, whether now or
hereafter acquired, other than Excepted Payments and Excepted Rights (which
collectively, excluding Excepted Payments and Excepted Rights but including all
property hereafter specifically subjected to the Lien of this Indenture by any
Indenture Supplement or any indenture supplemental hereto, are included within
the Trust Indenture Estate), to wit:
(1) the Aircraft (including the Airframe and the Engines) and
all replacements thereof and substitutions therefor to which the Owner
Trustee shall from time to time 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;
3
<PAGE> 9
(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 Warranty
Assignment; 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 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;
(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;
(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;
4
<PAGE> 10
(5) all requisition proceeds with respect to the Aircraft or
any part thereof (to the extent of the Owner Trustee's interest therein
pursuant to the Lease), and all insurance proceeds with respect to the
Aircraft or any part thereof, including but not limited to the insurance
required under Section 12 of the Lease or under any comparable provision
of any Assigned Sublease (but excluding any excess insurance maintained
by the Lessee and not required under Section 12 of the Lease or any
Assigned Sublease);
(6) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Indenture
Trustee by or for the account of the Owner Trustee pursuant to any term
of any Operative Document and held or required to be held by the
Indenture Trustee hereunder;
(7) all rights of the Owner Trustee to amounts paid or payable
by the Lessee to the Owner Trustee under the Refunding Agreement and all
rights of the Owner Trustee to enforce payments of any such amounts
thereunder; and
(8) all proceeds of the foregoing.
PROVIDED, HOWEVER, that the foregoing Granting Clause shall not subject to the
Lien of this Indenture any (i) Excepted Payments, (ii) Excepted Rights or (iii)
payment in amounts which have been distributed to the Owner Trustee or any
other Person in accordance with the provisions of this Agreement, AND SUBJECT
TO Sections 2.03, 5.10 and 9.01 hereof.
Concurrently with the delivery of the Original Indenture, the
Owner Trustee delivered to the Indenture Trustee the chattel paper original
executed counterparts of the Original Lease and Lease Supplement No. 1,
certified copies of the Purchase Agreement Warranty Assignment, and the
original Second Aircraft Warranty Bill of Sale and the BFE 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. 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
5
<PAGE> 11
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 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
6
<PAGE> 12
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 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.
7
<PAGE> 13
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Special Definitions. The definitions contained in
the Lease shall apply for all purposes of this Indenture except that the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined)
for all purposes of this Indenture. Except as otherwise indicated, all the
agreements or instruments defined herein or in the Lease shall mean such
agreements or instruments (including all annexes, appendices, exhibits,
schedules and supplements thereto) as the same may from time to time be
supplemented or amended or the terms thereof waived or modified to the extent
permitted by, and in accordance with, the terms thereof and of the other
Operative Documents and references to various Persons shall be deemed to be
references to and include their respective permitted successors and assigns.
"Amortization Amount" means, with respect to any Principal Amount
Repayment Date, the amount set forth opposite such Principal Amount
Repayment Date on the Amortization Schedule.
"Amortization Schedule" means the amortization schedule for the
Equipment Notes delivered pursuant to Section 2.02 hereof.
"Assigned Sublease" means a Permitted Sublease required to be
assigned to the Owner Trustee pursuant to Section 6(a) of the Lease.
"Average Life Date" for each Equipment Note to be redeemed shall
be the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Equipment
Note. "Remaining Weighted Average Life" of such Equipment Note, at the
redemption date of such Equipment Note, shall be the number of days
equal to the quotient obtained by dividing (a) the sum of the products
obtained by multiplying (i) the amount of each then remaining
installment of principal, including the payment due on the maturity date
of such Equipment Note, by (ii) the number of days from and including
the redemption date to but excluding the scheduled payment date of such
principal installment; by (b) the then unpaid Principal Amount of such
Equipment Note.
"Bankruptcy Code" means Chapter 11 of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq., as amended.
8
<PAGE> 14
"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.
"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 29, 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
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<PAGE> 15
United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
has a long-term unsecured debt rating from each Rating Agency of at
least A-3 or its equivalent.
"Eligible Institution" means (a) the corporate trust department
of the Subordination Agent or any Pass Through Trustee, as applicable,
or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term
unsecured debt rating from each Rating Agency of at least A-3 or its
equivalent.
"Equipment Notes" means the Equipment Notes, in substantially the
form set out in Section 2.01 hereof, issued by the Owner Trustee and
authenticated by the Indenture Trustee pursuant to the terms of this
Indenture.
"Equity Collateral" has the meaning assigned to such term in the
definition of "Excepted Payments."
"Excepted Payments" means (i) any and all indemnity payments and
interest in respect thereof paid or payable in respect of the Owner
Participant, the partners 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, or any partner of 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, any partner 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
10
<PAGE> 16
partnership, the partners of such partnership), directors, officers,
employees, servants, agents, subsidiaries, affiliates or shareholders
under Section 10 of the Lease or by the Lessee or the Parent Guarantor
under the Tax Indemnification Agreement or the Amended and Restated Head
Lease TIA (as defined in the Refunding Agreement), as the case may be,
(v) Transaction Expenses paid or payable by the Lessee or the Parent
Guarantor to the Trust Company, the Owner Trustee, the Indenture Trustee
or the Owner Participant pursuant to Section 21 of the Refunding
Agreement or the Lease, (vi) any letter of credit contemplated by
Section 8(l) of the Lease (including, without limitation, any
replacement letter of credit (the "Equity Collateral")) and any payment
or proceeds of any such Equity Collateral to the extent retained or
applied as provided in Section 8(l) of the Lease, (vii) any amount
payable to the Owner Participant by any transferee as the purchase price
of the Owner Participant's interest in the Trust Estate (or a portion
thereof), (viii) any amount payable to the Owner Trustee, the Trust
Company, the Owner Participant or any of their respective successors,
permitted assigns (and, in the case of a permitted assign of the Owner
Participant or any partner of the Owner Participant that is a
partnership, the partners of such partnership), directors, officers,
employees, servants, agents, subsidiaries, affiliates or shareholders
attributable to the period prior to or on the Restatement Date or under
the Original Participation Agreement, the Original Lease, the Parent
Head Lease Guaranty, the Sublease, the Amended and Restated Head Lease
TIA or the Amended and Restated Sublease TIA (as such terms are defined
in the Refunding Agreement) or Retained Head Lease Rights and
Obligations (as such term is defined in the Refunding Agreement), and
(ix) subject to the last sentence of Section 5.10 hereof, any and all
rights of the Owner Trustee, the Owner Participant or the Trust Company
under the Operative Documents, whether or not a Lease Event of Default,
a Lease Default, an Indenture Default or an Indenture Trustee Event has
occurred and is continuing, to demand, collect, sue for, give notices,
make determinations, enforce or exercise all rights with respect to and
otherwise obtain all amounts described in clauses (i) through (viii)
above and the proceeds thereof.
"Excepted Rights" means (i) those rights of the Owner Participant
and the Owner Trustee under Section 5.10 of this Indenture, (ii) all
rights under the Equity Collateral to make a claim for, collect and
retain all amounts payable with respect to any Equity Collateral, (iii)
all rights of the Owner Participant, the Trust Company or the Owner
Trustee to compromise or waive any such right or modify, amend or waive
any provision of any Operative Document conferring such rights with
respect to Excepted Payments, and (iv) all rights of the Owner Trustee
to exercise any election or option, or to make any decision or
determination,
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<PAGE> 17
or to give or receive any notice, consent, waiver or approval with
respect to Excepted Payments.
"Excess Amount" has the meaning specified in Section 2.03(b)
hereof.
"FAA" means the Federal Aviation Administration of the United
States Department of Transportation or any successor agency.
"Final Drawing" means, in respect of a Liquidity Facility, a
borrowing or drawing of all available and undrawn amounts under such
Liquidity Facility in accordance with the provisions thereof other than
a Downgrade Drawing.
"Government Obligations" means direct obligations of the United
States of America that are not callable, redeemable or payable prior to
maturity, in whole or in part, directly or indirectly, by any Person.
"Indenture," "this Indenture," and "the Indenture" mean this
First Amended and Restated Indenture, as it may from time to time be
supplemented or amended as herein provided, including as supplemented by
any Indenture Supplement pursuant hereto.
"Indenture Default" means an Indenture Event of Default or an
event or condition that, with the giving of notice or the lapse of time
or both, would become an Indenture Event of Default.
"Indenture Documents" means the Refunding Agreement; the Trust
Agreement (including any Trust Supplements); the Lease (including any
Lease Supplements); the Equipment Notes; this Indenture (including any
Indenture Supplements); any Sublease Assignment; any Assigned Sublease;
the Purchase Agreement (to the extent assigned to or for the benefit of
the Owner Trustee); the Purchase Agreement Warranty Assignment; the
Second Aircraft Warranty Bill of Sale and the BFE 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 Aircraft and any
Replacement Airframe and Replacement Engine included in the property of
the Owner
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<PAGE> 18
Trustee covered by this Indenture, including, without limitation, Trust
Indenture Supplement No. 1 dated December 29, 1989, which was recorded
as one instrument by the FAA with the Original Indenture, and Trust
Indenture Supplement No. 2 dated the date hereof, which is being filed
for recordation as one instrument by the FAA with this First Amended and
Restated Indenture.
"Indenture Trustee Event" means either (i) the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) or (c) of
this Indenture or (ii) the Indenture Trustee has taken action or
notified the Owner Trustee that it intends to take action to foreclose
the Lien of this Indenture or otherwise commence the exercise of any
significant remedy under this Indenture or the Lease.
"Interest Drawing" has the meaning assigned to such term in
Section 3.6(a) of the Intercreditor Agreement.
"Investment Earnings" means investment earnings on funds on
deposit in the Trust Accounts net of losses and investment expenses of
the Subordination Agent in making such investments.
"Lease" means the Original Lease, as the same may be modified,
supplemented or amended from time to time in accordance with the
provisions thereof and hereof and of the Refunding Agreement including,
without limitation, as supplemented by Lease Supplement No. 1 dated the
Delivery Date and Lease Supplement No. 2 dated January 5, 1995, and as
further assigned, amended, restated and supplemented by Assignment and
Amendment No. 1 and Sublease Termination Agreement [GPA 1989 BN-11]
dated as of the date hereof and Amended and Restated Aircraft Lease
Agreement [GPA 1989 BN-11] dated as of the date hereof and supplemented
by Lease Supplement [GPA 1989 BN-11] No. 3 dated the date hereof, which
are being filed for recordation 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
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<PAGE> 19
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 and/or the Owner Participant) or any Equipment
Notes held by the Lessee or any Affiliate of any thereof.
"Make-Whole Amount" means, with respect to any Equipment Note,
the amount (as determined by an independent investment banker selected
by Lessee and reasonably acceptable to the Indenture Trustee and the
Owner Participant) by which (a) the present value of the remaining
scheduled payments of principal and interest from the redemption date to
maturity of such Equipment Note computed by discounting each such
payment on a semiannual basis from its respective Payment Date (assuming
a 360-day year of twelve 30-day months) using a discount rate equal to
(i) in the case of Series A Equipment Notes and Series B Equipment
Notes, the Treasury Yield and (ii) in the case of Series C Equipment
Notes and Series D Equipment Notes, the Treasury Yield plus 0.75%
exceeds (b) the outstanding principal amount of such Equipment Note plus
accrued interest. For purposes of determining the Make-Whole Amount,
"Treasury Yield" at the time of determination with respect to any
Equipment Note means the interest rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment
Note and trading in the public securities market 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
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<PAGE> 20
statistical release designated as such, or any successor publication,
published by the Board of Governors of the Federal Reserve System. The
date of determination of a Make-Whole Amount shall be the third Business
Day prior to the applicable redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business
on the third Business Day prior to the applicable redemption date.
"Non-U.S. Holder" or "Non-U.S. Person" means any Person other
than a U.S. Person or a U.S. Holder.
"Note Holder" or "Holder" means any registered holder from time
to time of one or more Equipment Notes as reflected in the Register
maintained by the Registrar.
"Officers' Certificate" means a certificate (i) signed by a
Responsible Officer of the Owner Trustee or the Lessee, as the case may
be, and (ii) signed by another officer of the Owner Trustee or the
Lessee, as the case may be, certifying as to the authority and signature
of such Responsible Officer, that is delivered to the Indenture Trustee.
"Opinion of Counsel" means a written opinion of legal counsel,
who in the case of legal counsel for the Lessee may be (i) an attorney
employed by the Lessee who is generally empowered to deliver such
written opinions or (ii) Latham & Watkins or other counsel designated by
the Lessee and reasonably satisfactory to the Indenture Trustee or, in
the case of legal counsel for the Owner Trustee, may be Morris, James,
Hitchens & Williams or other counsel designated by the Owner Trustee and
reasonably satisfactory to the Indenture Trustee.
"Original Head Lessee" means GPA Leasing USA Sub I, Inc., a
Connecticut corporation, in its capacity as lessee under the Original
Lease.
"Original Indenture" means the Trust Indenture and Security
Agreement [GPA 1989 BN-11] dated as of December 19, 1989, as
supplemented by Trust Indenture Supplement No. 1 dated December 29,
1989, which were recorded as one instrument by the FAA on January 3,
1990 and assigned Conveyance No. V78689.
"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-11] dated as of September 21, 1990, as
supplemented and amended to the date hereof, between the Original Head
Lessee
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<PAGE> 21
in its capacity as sublessor thereunder and AWA in its capacity as
sublessee.
"Owner Participant" means ___________________, 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
July 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 Warranty Assignment" means the Purchase
Agreement Warranty Assignment [GPA 1989 BN-11], 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
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<PAGE> 22
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-
11] dated as of June __, 1997, 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 June __, 1997 or such other date agreed
to by the parties to the Refunding Agreement as the date for the
consummation of the Refinancing Transaction, as evidenced by the date of
the filing with the FAA of Trust Indenture Supplement No. 2.
"Second Aircraft Warranty Bill of Sale" means the full warranty
(as to title) bill of sale covering the Aircraft (excluding all of the
Buyer Furnished Equipment to be covered by the BFE Bill of Sale)
executed by the Original Head Lessee in favor of the Owner Trustee,
dated the Delivery Date.
"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
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<PAGE> 23
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.
"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 a "United
States Person" as that term is defined in Section 7701(a)(30) of the
Code.
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<PAGE> 24
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-11]
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 N632AW
No. $ Date: [ , 1997]
------------ ------------------- --------
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-11], dated as of December 19,
1989, as amended, between the Owner Participant named therein and Wilmington
Trust Company (herein as such Trust Agreement may be supplemented or amended
from time to time called the "Trust Agreement"), hereby promises to pay to
Fleet National Bank, as Subordination Agent under the Intercreditor Agreement,
or the registered assignee thereof, the principal sum of $_______ (the
"Principal Amount"), together with interest on the Principal Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Debt Rate indicated above. The Principal Amount of
this Equipment Note shall be payable in installments on the dates set forth in
Schedule I hereto equal to the corresponding percentage of the Principal Amount
of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest shall be due and payable in semiannual installments commencing on July
2, 1997, and thereafter on July 2 and January 2 of each year, to and including
___________, ____.
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<PAGE> 25
Notwithstanding the foregoing or anything to the contrary
contained herein, (i) the final payment made on this Equipment Note shall be in
an amount sufficient to discharge in full the unpaid Principal Amount and all
accrued and unpaid interest on, and any other amounts due under, this Equipment
Note; and (ii) if any date on which a payment under this Equipment Note becomes
due and payable is not a Business Day, then such payment shall not be made on
such scheduled date but shall be made on the next succeeding Business Day and
if such payment is made on such next succeeding Business Day, no interest shall
accrue on the amount of such payment during such extension.
For purposes hereof, the term "Indenture" means the First Amended
and Restated Trust Indenture and Security Agreement [GPA 1989 BN-11], dated as
of June __, 1997, 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 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
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<PAGE> 26
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 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
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<PAGE> 27
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 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.
* * *
- ----------------------------------
(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 a Series B, Series C or Series D Equipment
Note.
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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:
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<PAGE> 29
SCHEDULE I
EQUIPMENT NOTES AMORTIZATION
Percentage of
Principal Amount Principal Amount
Repayment Date to be Paid
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
four separate series consisting of Series A, Series B, Series C and Series D
and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Equipment Note shall be issued to the Pass
Through Trustees (or their designee) under the Pass Through Trust Agreements
set forth in Schedule II to be attached hereto in connection therewith and (ii)
the Original Loan Certificates issued under the Original Indenture shall be
concurrently prepaid. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of each Series may
be in an amount that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Principal Amount thereof from time to time outstanding,
payable in arrears on July 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 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
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<PAGE> 30
period the same is overdue. Amounts shall be overdue if not paid when due
(whether at stated maturity, by acceleration or otherwise). Notwithstanding
anything to the contrary contained herein, if any date on which a payment under
any Equipment Note becomes due and payable is not a Business Day then such
payment shall not be made on such scheduled date but shall be made on the next
succeeding Business Day and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment during
such extension.
The Owner Trustee agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.04 hereof (a) any and all indemnity
amounts received by the Owner Trustee which are payable by Lessee to (i) the
Indenture Trustee in its individual capacity, (ii) the Pass Through Trusts,
(iii) the Subordination Agent, (iv) the Liquidity Providers, or (v) the Pass
Through Trustees, in each case pursuant to Sections 10 and 13 of the Lease or
Section 21 of the Refunding Agreement, (b) any and all amounts received by the
Owner Trustee which are payable by Lessee in respect of and equal to the Owner
Trustee's pro rata share (as defined below) of all amounts owed to the
Liquidity Providers by the Subordination Agent under each Liquidity Facility
(as determined by the Subordination Agent in consultation with the Liquidity
Providers and notified to the Indenture Trustee) other than amounts due as (i)
repayments of the principal of advances thereunder, and (ii) interest on
Interest Drawings, Final Drawings and Applied Downgrade Drawings under any
Liquidity Facility except to the extent included in Net Interest and Related
Charges (as defined below), and (c) any and all amounts received by the Owner
Trustee which are payable by Lessee under clause (vii) or (viii) of the
definition of Supplemental Rent. The Indenture Trustee shall have no duty or
obligation to (i) verify or confirm the accuracy of any of the amounts (other
than the portion of the Principal Amount of, and interest on, the Equipment
Notes issued hereunder) paid to it by the Owner Trustee or (ii) determine
whether any amounts are owed by the Owner Trustee under this Section 2.02. As
used in this Section 2.02, "Owner Trustee's pro rata share" means as of any
time:
(A) with respect to all amounts other than Net Interest and
Related Charges, a fraction the numerator of which is the aggregate
principal balance then outstanding of the Equipment Notes issued
hereunder and the denominator of which is the aggregate principal
balance then outstanding of all "Equipment Notes" issued under the
Indentures, and
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default (as defined below) under any Equipment
Note a fraction, the numerator of which is the aggregate principal
balance then outstanding of the Equipment Notes issued hereunder and the
denominator of which is the aggregate principal balance then outstanding
of all "Equipment Notes" issued under the Indentures under
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<PAGE> 31
which there exists a Payment Default or (y) at all other times, zero;
provided, however, neither the numerator nor the denominator of the fractions
in paragraphs (A) or (B) shall include any "Series D Equipment Notes" issued
under the Indentures. As used in this Section 2.02, "Net Interest and Related
Charges" means (as determined by the Subordination Agent in consultation with
the Liquidity Providers and notified to the Indenture Trustee except that the
Past Due Rate shall be determined by the Indenture Trustee and notified to the
Subordination Agent) the sum of (i) the amount, if any, by which interest
payable to any Liquidity Provider on any Interest Drawing, Final Drawing and/or
Downgrade Drawing (other than a Downgrade Drawing that is not an Applied
Downgrade Drawing (as defined in the Liquidity Facilities)) exceeds the amount
which would be payable if such advances bore interest at the Designated
Interest Rate (as defined below) plus (ii) any amounts payable under Section
3.1, Section 3.2, Section 3.3, Section 3.9 or Section 7.7 of each Liquidity
Facility (or similar provisions of any succeeding liquidity facility) which
result from any Interest Drawing, Final Drawing or Downgrade Drawing. As used
in this Section 2.02, "Designated Interest Rate" means the weighted average
Past Due Rate (as defined in the applicable Indentures) in respect of "Series A
Equipment Notes," "Series B Equipment Notes" and "Series C Equipment Notes"
issued under the Indentures, except with respect to that portion of any Final
Drawing (or Downgrade Drawing which becomes a Final Drawing) which remains in a
Cash Collateral Account, Designated Interest Rate means the weighted average
Investment Earnings of funds in the Cash Collateral Accounts. As used in this
Section 2.02, a "Payment Default" when used in connection with an "Equipment
Note" issued under an Indenture means a default in the payment of principal
thereof or interest thereon, other than a default in the payment of principal
or interest on a "Series D Equipment Note" issued under the Indentures which
has not been cured other than solely because of acceleration. For purposes of
Section 3.04(b) hereof, this is the fourth paragraph of Section 2.02.
The Equipment Notes shall be executed on behalf of the Owner
Trustee by its President or one of its Vice Presidents, Assistant Vice
Presidents or Assistant Secretaries or other authorized officer. Equipment
Notes bearing the signatures of individuals who were at any time the proper
officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Equipment Notes or did not hold such
offices at the respective dates of such Equipment Notes. The Owner Trustee may
from time to time execute and deliver Equipment Notes with respect to the
Aircraft to the Indenture Trustee for authentication upon original issue and
such Equipment Notes shall thereupon be authenticated and delivered by the
Indenture Trustee upon the written request of the Owner Trustee signed by a
Vice President or Assistant Vice President or other authorized officer of the
Owner Trustee; provided, however,
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<PAGE> 32
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 Person or Persons of any of
them, and (ii) none of the Trust Company, the Owner Participant, any partner of
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
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<PAGE> 33
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.
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
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<PAGE> 34
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 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
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<PAGE> 35
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
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
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<PAGE> 36
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, except as otherwise expressly
provided herein, 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,
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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 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
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<PAGE> 38
new Equipment Note is issued and the date to which interest on such old
Equipment Note or Equipment Notes has been paid. Interest shall be deemed to
have been paid on such new Equipment Note to the date on which interest shall
have been paid on such old Equipment Note, and all payments of the Principal
Amount marked on such new Equipment Note, as provided above, shall be deemed to
have been made thereon. Neither the Indenture Trustee nor the Owner Trustee
shall be required to exchange any surrendered Equipment Notes as provided above
during the ten-day period preceding the Payment Date. The Indenture Trustee
will promptly notify the Owner Trustee, the Owner Participant and Lessee of
each registration of a transfer of an Equipment Note. Any such transferee of
an Equipment Note, by its acceptance of an Equipment Note, agrees to the
provisions of the Refunding Agreement applicable to Note Holders, and shall be
deemed to have represented and warranted to the parties to the Refunding
Agreement as to the matters represented and warranted by the Subordination
Agent in its capacity as the initial Holder of the Equipment Notes. Subject to
compliance by the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee
shall use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within 10 Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment
Notes. If any Equipment Note shall become mutilated, destroyed, lost or
stolen, the Owner Trustee shall, upon the written request of the Holder of such
Equipment Note, execute and the Indenture Trustee shall authenticate and
deliver in replacement thereof a new Equipment Note, payable in the same
Principal Amount dated the same date and captioned as originally issued. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Indenture Trustee and a copy thereof shall be
furnished to the Owner Trustee. If the Equipment Note being replaced has been
destroyed, lost or stolen, the Holder of such Equipment Note shall furnish to
the Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee
such security or indemnity as may be reasonably required by them to save the
Lessee, the Owner Trustee, the Owner Participant and the Indenture Trustee
harmless and evidence satisfactory to the Lessee, the Owner Trustee, the Owner
Participant and the Indenture Trustee of the destruction, loss or theft of such
Equipment Note and of the ownership thereof. If a bank or trust company with a
net worth of $200,000,000 or more is the Holder of any such destroyed, lost or
stolen Equipment Note, then the written indemnity of such 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
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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, 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.
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(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 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
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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.
SECTION 2.13. Subordination. (a) The Owner Trustee and, by
acceptance of its Equipment Notes of any Series, each Note Holder of such
Series, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of such Series,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 4.02(g), (h) or
(i) hereof, except as expressly provided in Articles II and III hereof.
(b) By the acceptance of its Equipment Notes of any Series
(other than Series A), each Note Holder of such Series agrees that in the event
that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder or
Senior Holders (as defined in Section 2.13(c) hereof) and will forthwith turn
over such payment to the Indenture Trustee in the form received to be applied
as provided in Articles II and III hereof.
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(c) As used in this Section 2.13, the term "Senior Holder" or
"Senior Holders" shall mean, (i) the Note Holders of Series A until the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, (ii)
after the Secured Obligations in respect of Series A Equipment Notes have been
paid in full, the Note Holders of Series B until the Secured Obligations in
respect of Series B Equipment Notes have been paid in full and (iii) after the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full, the Note Holders of Series C until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Certain Rent Distributions. Except as otherwise
provided in Section 3.02, 3.03 or 3.04 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 the Equipment Notes and to all other amounts
payable hereunder by applying such funds in the following order of priority:
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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 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.
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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
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 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
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(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 and not otherwise provided for herein shall be applied forthwith
to the purpose for which such payment was made in accordance with or as
otherwise provided by the terms of the Lease.
(b) The Indenture Trustee will distribute promptly upon receipt
any indemnity payment received by it from the Owner Trustee or the Lessee in
respect of (i) the Indenture Trustee in its individual capacity, (ii) any Pass
Through Trust, (iii) the Subordination Agent, (iv) the Liquidity Providers, and
(v) the Pass Through Trustees, in each case whether pursuant to Section 10 or
13 of the Lease or Section 21 of the Refunding Agreement or as Supplemental
Rent, directly to the Person entitled thereto. Any payment received by the
Indenture Trustee under clause (b) of the fourth paragraph of Section 2.02
shall be distributed to the Subordination Agent to be distributed in accordance
with the terms of the Intercreditor Agreement, and any payment received by the
Indenture Trustee under clause (c) of the fourth paragraph of Section 2.02
shall be distributed directly to the Persons entitled thereto.
(c) Notwithstanding anything to the contrary contained in this
Article III, any sums received by the Indenture Trustee that constitute
Excepted Payments shall be distributed promptly upon receipt by the Indenture
Trustee directly to the Person or
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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.
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
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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 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;
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(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
(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
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(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 managing partner of
the Owner Participant with responsibility for or familiarity with the
transactions contemplated hereunder and under the other Operative
Documents (or any Vice President of the managing partner 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 (other than the representation made in Section
9(b)(8) thereof) or by any Person guaranteeing or supporting the
obligations of the Owner Participant under the Operative Documents 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
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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)(10),
10 or 14 of the Refunding Agreement, or the disaffirmance or repudiation
by any Person that has guaranteed or may guarantee or support the
obligations of the Owner Participant under the Operative Documents; 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 that has guaranteed or may guarantee or support
the obligations of the Owner Participant under the Operative Documents
to observe or perform any covenant or obligation of such Person
contained in any such guarantee or support agreement, which failure, in
any case and either individually or together with other then existing
failures, shall have a material adverse effect on the rights and
interests of the Indenture Trustee or any Note Holder and is not
remedied within a period of 45 calendar days following notice being
given to the Owner Trustee, the Owner Participant or such Person, as the
case may be, by the Indenture Trustee or a Majority in Interest of Note
Holders; or
(g) either the Trust Estate or the Owner Trustee with respect
thereto (and not in its individual capacity) or the Owner Participant,
any of its partners, or any Person that has guaranteed or may guarantee
or support the obligations of the Owner Participant 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
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(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, any of its partners, or
any Person that has guaranteed or may guarantee or support the
obligations of the Owner Participant 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, any of its partners, 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, any of its partners, or any Person that has
guaranteed or may guarantee or support the obligations of the Owner
Participant 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
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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 sentence, such Lease Event of Default shall
have been remedied, then any declaration pursuant to the Lease that the Lease
is in default, and any declaration pursuant to this Indenture that the
Equipment Notes are due and payable or that an Indenture Event of Default
exists hereunder, based upon such Lease Event of Default, shall be deemed to be
rescinded, and the Owner Participant or the Owner Trustee, as the case may be,
shall (to the extent of any such payments made by it) be subrogated to the
rights of the Note Holders hereunder to receive such payment of Rent from the
Indenture Trustee (and the payment of interest on account of such Rent being
overdue), and shall be entitled, so long as no other Indenture Default or
Indenture Event of Default shall have occurred and be continuing, to receive,
subject to the terms of this Indenture, such payment upon receipt thereof by
the Indenture Trustee; provided that the Owner Participant shall not otherwise
attempt to recover any such amount paid by it on behalf of the Lessee pursuant
to this Section 4.03 except by demanding of the Lessee payment of such amount,
or by commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or
taking appropriate action in a pending action at law against the Lessee or by
demanding Excepted Payments or Excepted Rights; provided, however, that at no
time while an Indenture Event of Default shall have occurred and be continuing
shall any such demand be made or shall any such action be commenced (or
continued) and any amounts nevertheless received by the Owner Participant in
respect thereof shall be held in trust for the benefit of, and promptly
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paid to, the Indenture Trustee for distribution as provided in Section 3.03
hereof; and provided, further, that
(x) this Section 4.03 shall not apply with respect to any
default in the payment of Basic Rent due under the Lease, if the Lessee
itself shall have theretofore failed to pay Basic Rent in the manner
required under the Lease (after giving effect to any applicable grace
period) as to (i) each of the three Basic Rent Payment Dates immediately
preceding the date of such default or (ii) in the aggregate more than
six Basic Rent Payment Dates,
(y) the second sentence of this Section 4.03 shall cease to
apply, and no payment by the Owner Participant in respect of
Supplemental Rent or performance of any obligation of the Lessee under
the Lease by the Owner Trustee shall be deemed to remedy or to have
remedied any Lease Event of Default for the purposes of this Indenture,
if during the 12-month period immediately preceding the relevant default
by the Lessee there shall have been expended by the Owner Participant
pursuant to the second sentence of this Section 4.03 (and shall have not
been reimbursed by the Lessee or any Permitted Sublessee themselves to
the Owner Trustee for distribution to the Owner Participant) an amount
in excess of $3,500,000, and
(z) neither the Owner Trustee nor the Owner Participant shall
(without the prior written consent of a Majority in Interest of Note
Holders) have the right to cure any Lease Default or Lease Event of
Default except as specified in this Section 4.03.
SECTION 4.04. Remedies. (a) If an Indenture Event of Default
shall have occurred and be continuing and so long as the same shall be
continuing unremedied, and if the Equipment Notes shall have been accelerated
pursuant to Section 4.04(b) or 4.04(c) hereof, then and in every such case the
Indenture Trustee may (subject to the rights of the Owner Participant or the
Owner Trustee to cure any such Indenture Event of Default set forth in Section
4.03 hereof and the obligations of the Indenture Trustee set forth in this
Section 4.04(a) and subject to Section 10.05 hereof) exercise any or all of the
rights and powers and pursue any and all of the remedies pursuant to this
Article IV and shall have and may exercise all of the rights and remedies of a
secured party under the Uniform Commercial Code and, in the event such
Indenture Event of Default is an Indenture Event of Default referred to in
paragraph (a) of Section 4.02 hereof, the Indenture Trustee may (subject as
aforesaid), at the direction of a Majority in Interest of Note Holders,
exercise any and all of the remedies pursuant to Section 18 of the Lease and
pursuant to any Sublease Assignment and may take possession of all or any 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
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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 thirty days' prior written notice of its intention to
sell the Aircraft. Without limiting any of the foregoing, it is understood and
agreed that the Indenture Trustee may exercise any right of sale of the
Aircraft available to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding, the
Indenture Trustee shall not be entitled to exercise any remedy hereunder if
there shall have occurred or be continuing a Lease Event of Default unless the
Indenture Trustee shall have exercised or concurrently be exercising one or
more of the remedies provided for in Section 18 of the Lease to terminate the
Lease or take possession and/or sell the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Indenture Trustee is, and has been, for a
continuous period in excess of 60 days or such other period as may be specified
in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period
being the "Section 1110 Period"), stayed or prohibited by applicable law or
court order from exercising such remedies under the Lease (a "Continuous Stay
Period"); provided further, however, that the requirement to exercise one or
more of such remedies under the Lease shall nonetheless be applicable during a
Continuous Stay Period subsequent to the expiration of the Section 1110 Period
to the extent that the continuation of such Continuous Stay Period subsequent
to the expiration of the Section 1110 Period (A) results from an agreement by
the trustee or the debtor-in-possession in such proceeding during the Section
1110 Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1) of the Bankruptcy Code or (B) is an
extension of the Section 1110 Period with the consent of the Indenture Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Lessee's assumption during the Section 1110 Period with the approval of the
relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or
(D) is the consequence of the Indenture Trustee's own failure to give any
requisite notice to any Person (unless the Indenture Trustee is stayed or
otherwise precluded by applicable law from giving such notice). In the event
that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft
is being contested by the Lessee in judicial proceedings, so long as the
Indenture Trustee fails to participate in such proceedings, the Owner Trustee
shall have the right (without affecting in any way any right or remedy of
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the Indenture Trustee hereunder) to participate in such proceedings.
The foregoing shall not preclude the Indenture Trustee from
notifying any Permitted Sublessee that payments under any Assigned Sublease are
to be made directly to it pursuant to the terms of the relevant Sublease
Assignment, or, except as expressly provided above, from exercising its rights
or remedies hereunder and under the other Operative Documents. For the
avoidance of doubt, it is expressly understood and agreed, subject only to the
immediately preceding paragraph, that the above-described inability of the
Indenture Trustee to exercise any right or remedy under the Lease shall in no
event and under no circumstance prevent the Indenture Trustee from otherwise
exercising all of its rights, powers and remedies under this Indenture,
including without limitation this Article IV.
(b) If an Indenture Event of Default referred to in clause
(g), (h) or (i) of Section 4.02 hereof shall have occurred, or a Lease Event of
Default under clause (e), (f) or (g) of Section 17 of the Lease shall have
occurred, then and in every such case the unpaid Principal Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest and
all other amounts due thereunder and hereunder, shall immediately and without
further act become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not specified in Section
4.04(b) hereof shall have occurred and be continuing, then and in every such
case the Indenture Trustee may (and shall, upon receipt of a written demand
therefor from a Majority in Interest of Note Holders), subject to Section 4.03
hereof, at any time, by written notice or notices to the Owner Trustee, declare
the unpaid Principal Amount of all Equipment Notes to be due and payable,
whereupon the unpaid Principal Amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and all other amounts due
thereunder and hereunder, shall immediately become due and payable without
presentment, demand, protest or further notice, all of which are hereby waived.
(d) Sections 4.04(b) and (c), however, are subject to the
condition that, if at any time after the Principal Amount of the Equipment
Notes shall have become so due and payable, and before any judgment or decree
for the payment of the money so due, or any thereof, shall be entered, all
overdue payments of interest upon the Equipment Notes and all other amounts
payable under the Equipment Notes (except the Principal Amount of the Equipment
Notes which by such declaration shall have become payable) shall have been duly
paid and every other Indenture Default and Indenture Event of Default with
respect to any 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
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the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Indenture
Default or Indenture Event of Default or impair any right consequent thereon.
Any acceleration pursuant to Sections 4.04(b) and (c) shall be
automatically rescinded and any related declaration of an Indenture Event of
Default annulled in the event that the Owner Trustee or the Owner Participant,
as the case may be, shall have cured, in accordance with Section 4.03, the
Indenture Event of Default that resulted in such acceleration.
No Make-Whole Amount shall become payable on the Equipment Notes
as a result of any acceleration under Section 4.04(b) or 4.04(c).
(e) Each Note Holder shall be entitled, at any sale pursuant
to Section 18 of the Lease, to credit against any purchase price bid at such
sale by such Note Holder all or any part of the unpaid obligations owing to
such Note Holder and secured by the Lien of this Indenture. The Owner Trustee
or Owner Participant may be a cash purchaser at any such sale.
(f) Notwithstanding anything contained herein, so long as the
Pass Through Trustee under any Pass Through Trust Agreement or the
Subordination Agent on its behalf is a Note Holder, the Indenture Trustee will
not be authorized or empowered to acquire title to any property in the Trust
Indenture Estate or take any action with respect to any property in the Trust
Indenture Estate so acquired by it if such acquisition or action would cause
any trust created pursuant to the Trust Agreement to fail to qualify as a
"grantor trust" for federal income tax purposes.
SECTION 4.05. Return of the Aircraft, etc. (a) Subject to the
rights of the Owner Trustee and the Owner Participant under Section 4.03 hereof
and unless the Owner Participant shall have theretofore purchased the Equipment
Notes pursuant to Section 2.12 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Equipment Notes shall have been
accelerated pursuant to Section 4.04(b) or 4.04(c) hereof, at the request of
the Indenture Trustee the Owner Trustee shall promptly execute and deliver to
the Indenture Trustee such instruments of title and other documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee or an agent or representative designated by the Indenture Trustee, at
such time or times and place or places as the 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
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to immediate possession and requiring the Owner Trustee to execute and deliver
such instruments and documents to the Indenture Trustee, to the entry of which
judgment the Owner Trustee hereby specifically consents to the fullest extent
it may lawfully do so, and (ii) to the extent permitted by law, pursue all or
part of the Trust Indenture Estate wherever it may be found (but not in
violation of Section 10.05 hereof or of the Lease) and may enter any of the
premises of the Lessee wherever such Trust Indenture Estate may be or be
supposed to be and search for and take possession of and remove the same (but
not in violation of Section 10.05 hereof or of the Lease). All expenses of
obtaining such judgment or of pursuing, searching for and taking such property
shall, until paid, be secured by the Lien of this Indenture.
(b) Upon a Lease Event of Default which is continuing, the
Indenture Trustee may, from time to time, at the expense of the Trust Indenture
Estate, make all such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Trust
Indenture Estate, as it may deem proper (it being understood and agreed that
the provisions hereof shall not be construed so as to expand the obligations of
the Lessee under the Lease, including Section 16 thereof). In each such case,
the Indenture Trustee shall have the right to maintain, use, operate, store,
lease, control or manage the Trust Indenture Estate and to carry on the
business (without limiting the express provisions of Section 5.10 hereof) and
to exercise all rights and powers of the Owner Participant and the Owner
Trustee relating to the Trust Indenture Estate, as the Indenture Trustee shall
deem best, including the right to enter into any and all such agreements with
respect to the maintenance, insurance, use, operation, storage, leasing,
control, management or disposition of the Trust Indenture Estate or any part
thereof as the Indenture Trustee may determine; and the Indenture Trustee shall
be entitled to collect and receive directly all tolls, rents (including Rent),
revenues, issues, income, products and profits of the Trust Indenture Estate
and every part thereof, except Excepted Payments, without prejudice, however,
to the right of the Indenture Trustee under any provision of this Indenture to
collect and receive all cash held by, or required to be deposited with, the
Indenture Trustee hereunder, except Excepted Payments. The Indenture Trustee
shall, pursuant to the exercise of its remedies under this 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
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make all payments which the Indenture Trustee may be required or may elect to
make, if any, for taxes, assessments, insurance or other proper charges upon
the Trust Indenture Estate or any part thereof (including the employment of
engineers and accountants to examine, inspect and make reports upon the
properties and books and records of the Owner Trustee), and all other payments
that the Indenture Trustee may be required or authorized to make under any
provision of this Indenture, as well as just and reasonable compensation for
the services of the Indenture Trustee, and of all Persons properly engaged and
employed by the Indenture Trustee.
SECTION 4.06. Remedies Cumulative. Each and every right, power
and remedy given to the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Indenture
Trustee, and the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy. No delay or omission
by the Indenture Trustee in the exercise of any right, remedy or power or in
the pursuance of any remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner Trustee or the
Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings. In case the
Indenture Trustee or any Note Holder shall have instituted any proceeding to
enforce any right, power or remedy under this Indenture by foreclosure, entry
or otherwise, and such proceedings shall have been discontinued or abandoned
for any reason or shall have been determined adversely to the Indenture Trustee
or such Note Holder, then and in every such case the Owner Trustee, the
Indenture Trustee, the Note Holders and the Lessee shall, subject to any
determination in such proceedings, 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
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Default (i) in the payment of the Principal Amount of or interest on any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under Article IX hereof, cannot be modified or amended without
the consent of each Note Holder.
SECTION 4.09. Exercise of Remedies by Foreign Note Holders. If
the Indenture Trustee shall exercise remedies pursuant to this Article IV, at a
time when (i) the Aircraft is registered with the Federal Aviation
Administration, (ii) 25% or more of the then unpaid Principal Amount of the
Equipment Notes is held by one or more Persons which are not a "citizen of the
United States" within the meaning of Section 40102(a)(15) of the Federal
Aviation Act and (iii) remedies are to be exercised pursuant to this Article IV
as a result of the occurrence of an Indenture Event of Default which is not a
Lease Event of Default, the Indenture Trustee shall make arrangements, if any,
as may be required by law so that such exercise of remedies shall not result in
the ineligibility of the Aircraft to be registered under the Federal Aviation
Act.
ARTICLE V
DUTIES OF THE INDENTURE TRUSTEE
SECTION 5.01. Notice of Indenture Event of Default. In the
event the Indenture Trustee shall have knowledge of an Indenture Event of
Default, or shall have knowledge of an Indenture Default arising either from a
failure to pay Rent or a Lease Default of the type referred to in the second
sentence of Section 4.03, the Indenture Trustee shall give prompt notice
thereof to the Owner Trustee, the Owner Participant and the Lessee by
facsimile, telex, telegraph or telephone (confirmed by written notice in the
manner provided by Section 10.06 hereof), 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
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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, 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
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Document (including, without limitation, Section 15 of the Lease), may so
request. Notwithstanding the foregoing or anything in this Indenture to the
contrary, the Indenture Trustee may, on the advice of its counsel and without
the consent or approval of any Note Holder, approve any counsel asked to opine
on any matters under Section 11(b)(ii) of the Refunding Agreement, Section
6(a)(iii) of the Lease or under this Indenture and approve any opinion issued
by such counsel. None of the Owner Participant, the Owner Trustee or the
Lessee have any liability for the failure of the Indenture Trustee to discharge
its obligations hereunder.
SECTION 5.03. Indemnification. The Indenture Trustee shall not
be required to take any action or refrain from taking any action under Section
5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof
unless the Indenture Trustee shall have been indemnified against any liability,
cost or expense (including counsel fees) that may be incurred in connection
therewith. The Indenture Trustee shall not be under any obligation to take any
action under this Indenture and nothing in this Indenture contained shall
require the Indenture Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. The Indenture
Trustee shall not be required to take any action under Section 5.01 (other than
the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other
provision of this Indenture be deemed to impose a duty on the Indenture Trustee
to take any action, if the Indenture Trustee shall have been advised by counsel
that such action is contrary to the terms hereof or of the other Indenture
Documents or is otherwise contrary to law.
SECTION 5.04. No Duties Except as Specified in Indenture or
Instructions. The Indenture Trustee shall not have any duty or obligation to
maintain, use, operate, store, lease, control, manage, sell, dispose of, insure
or otherwise deal with the Aircraft or any other part of the Trust Indenture
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, this Indenture or any Indenture Document or any part of the
Trust Indenture Estate, except as expressly provided by the terms of this
Indenture or as expressly provided in written instructions from Note Holders as
provided in this Indenture and no implied duties or obligations shall be read
into this Indenture against the Indenture Trustee. It is understood that, as
between the Indenture Trustee and the Note Holders, with respect to all matters
left to the discretion of the Indenture Trustee hereunder, or under any
Indenture Document, the Indenture Trustee shall have the right to request
written instructions from the Note Holders and, pending receipt of such
instructions from the Note Holders or the required percentage thereof as
provided herein, the Indenture Trustee shall not be required to take any such
discretionary action hereunder; provided, however, that if
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the Indenture Trustee shall request written instructions pursuant to this
Section 5.04, it will use reasonable efforts to seek and obtain such
instructions promptly so as not unreasonably to delay the proposed action of
Lessee in respect of which the instructions are sought. The Indenture Trustee
agrees that it will in its individual capacity and at its own cost and expense
(but without any right of indemnity in respect of any such cost or expense
under Article VII hereof or any other Operative Document) promptly take such
action as may be necessary to duly discharge all Lenders' Liens on any part of
the Trust Indenture Estate attributable to it in its individual capacity.
SECTION 5.05. No Action Except Under Lease, Refunding Agreement,
Indenture or Instructions. The Owner Trustee and the Indenture Trustee agree
that they will not use, operate, store, lease, control, manage, sell, dispose
of or otherwise deal with, or place Liens on, the Aircraft or any other part of
the Trust Indenture Estate except (i) as required or permitted by the terms of
the Lease or the Refunding Agreement, or (ii) in accordance with the powers
granted to, or the authority conferred upon, the Owner Trustee and the
Indenture Trustee pursuant to this Indenture and in accordance with the terms
hereof.
SECTION 5.06. Replacement Airframes, Replacement Engines and
Replacement Parts. (a) If at any time and from time to time, the Airframe or
Engine(s) may, or may be required to, be replaced under Section 6(a), 11(a),
11(b) or 16(c) of the Lease by a Replacement Airframe or Replacement Engine(s),
as the case may be, in accordance with the provisions of this Section 5.06 and
the provisions of said Sections of the Lease, the Owner Trustee shall, at such
time or times, but subject to compliance with the conditions to such
replacement set forth in the Lease, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine(s) as appropriate from the
Lien of this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid, but only upon receipt by or deposit with the Indenture
Trustee of the following:
(1) A written request from the Owner Trustee, requesting such release
and specifically describing the Airframe and/or Engine(s) so to be released and
the Replacement Airframe and/or Replacement Engine(s).
(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.
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;
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(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) to be received as consideration
for the Engine 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, an appraisal from BK
Associates, Avmark Services Ltd., AeroEconomics, Inc. or another firm of
independent aircraft appraisers satisfactory to the Indenture Trustee
confirming the accuracy of the information set forth in Section 5.06(a)2.A(vii)
hereof.
(5) The opinion of counsel to the Lessee, satisfactory to the
Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property that have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the
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requirements of this Indenture and the Lease and, upon the basis of such
application, the property so sold or disposed of may be properly
released from the Lien of this Indenture and all conditions precedent
herein provided for relating to such release have been complied with;
(ii) the Replacement Airframe and/or Replacement Engine(s) have
been validly subjected to the Lien of this Indenture and covered by the
Lease, the instruments subjecting such Replacement Airframe or
Replacement Engine to the Lien of this Indenture and the Lease, and
subjecting to any relevant Assigned Sublease and Sublease Assignment, as
the case may be, have been duly filed for recordation pursuant to the
Federal Aviation Act or any other law then applicable to the
registration of the Aircraft, and no further action, filing or recording
of any document is necessary in order to establish and perfect, in the
United States and, if the Aircraft is registered outside the United
States, in the jurisdiction of registration, the legal title to such
Replacement Airframe and/or Replacement Engine and the Lien of this
Indenture on such Replacement Airframe and/or Replacement Engine; and
(iii) the Owner Trustee and the Indenture Trustee (as assignee
of the Owner Trustee's rights under the Lease) shall be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to the
Replacement Airframe and, if an Event of Loss with respect to the
Aircraft has occurred, the Replacement Engines to the same extent as
with respect to the Airframe and Engines then installed thereon prior to
such replacement.
(b) Upon the acquisition by the Owner Trustee of title to or
other interest in any Part under and as provided in the Lease, the same shall
automatically and without further act become subject to the Lien of this
Indenture, and to the extent the Owner Trustee is divested of title to or other
interest in any Part under and as provided in the Lease, the same shall
automatically and without further act cease to be subject to the Lien of this
Indenture. The Indenture Trustee shall at any time and from time to time at
the request of the Lessee execute an appropriate written instrument or
instruments to confirm the release of any Part from the Lien of this Indenture
as provided in this Section 5.06(b), but only upon receipt by the Indenture
Trustee of an Officers' Certificate of Lessee confirming such release is
authorized by the terms hereof.
SECTION 5.07. Indenture Supplements for Replacements. In the
event of the substitution of a Replacement Airframe or 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
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5.06 hereof, and execute and deliver to the Lessee (or any relevant Permitted
Sublessee) an appropriate instrument releasing the Airframe and/or Engine(s)
being replaced from the Lien of this Indenture.
SECTION 5.08. Effect of Replacement. In the event of the
substitution of a Replacement Airframe or Engine as contemplated by Section 11
of the Lease and Section 5.06 hereof, all provisions of this Indenture relating
to the Airframe or Engine(s) being replaced shall be applicable to such
Replacement Airframe or Replacement Engine(s) with the same force and effect as
if such Replacement Airframe or Replacement Engine(s) were the same airframe or
engine(s), as the case may be, as the Airframe or Engine(s) being replaced.
SECTION 5.09. Notices, etc. Where this Indenture expressly
provides for notice to Note Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed, first-
class postage prepaid, to each Note Holder entitled thereto, at his last
address as it appears in the Register. In any case where notice to Note
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Note Holder shall affect the
sufficiency of such notice with respect to other Note Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Note Holders shall be filed with the Indenture Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Note
Holders when such notice is required to be given pursuant to any provision of
this Indenture, then any manner of giving such notice as shall be satisfactory
to the Indenture Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant. Notwithstanding any other provisions of this 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
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of any Excepted Payment and seek legal or equitable remedies to require
the Lessee to maintain the insurance coverage referred to in Section 12
of the Lease (or the comparable provisions of any Assigned Sublease) and
such specific performance of the covenants of the Lessee under the Lease
(or the comparable provisions of any Assigned Sublease) relating to the
protection, maintenance, possession and use of the Aircraft; provided,
that the rights referred to in this clause (a) shall not be deemed to
include the exercise of any remedies provided for in Section 18 of the
Lease (or the comparable provisions of any Assigned Sublease) other than
the right to proceed by appropriate court action, either at law or in
equity, to enforce payment by the Lessee of such amounts included in
Excepted Payments or performance by the Lessee of such insurance
covenant or to recover damages for the breach thereof or for specific
performance of any covenant of the Lessee;
(b) (i) the Indenture Trustee shall not, without the consent of
the Owner Trustee, enter into, execute and deliver amendments or
modifications in respect of any of the provisions of the Lease, any
Assigned Sublease or any Sublease Assignment and (ii) unless an
Indenture Event of Default and an Indenture Trustee Event shall have
occurred and be continuing, the Indenture Trustee shall not, without the
consent of the Owner Trustee, which consent shall not be withheld if no
right or interest of the Owner Trustee or the Owner Participant shall be
materially diminished or impaired thereby, (A) enter into, execute and
deliver waivers or consents in respect of any of the provisions of the
Lease, any Assigned Sublease or any Sublease Assignment, or (B) approve
any accountants, engineers, appraisers or counsel as satisfactory to
render services for or issue opinions to the Owner Trustee pursuant to
the Operative Documents (other than tax opinions issued to the Owner
Participant, any partner of the Owner Participant or the Owner Trustee);
provided that, whether or not an Indenture Event of Default has occurred
and is continuing, the Owner Trustee's consent shall be required with
respect to any waivers or consents in respect of any of the provisions
of Section 6, 12 or 16 of the Lease, or of any other Section of the
Lease to the extent such action shall affect (y) the amount or timing
of, or the right to enforce payment of any Excepted Payment or (z) the
amount or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of the
Owner Trustee) which, absent the occurrence and continuance of an
Indenture Event of Default hereunder, would be distributable to the
Owner Trustee under Article III hereof;
(c) at all times whether or not an Indenture Event of Default
has occurred and is continuing, the Owner Trustee and the Owner
Participant shall have the right, together with the Indenture Trustee,
(i) to receive from the Lessee or any Permitted Sublessee all notices,
certificates,
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reports, filings, opinions of counsel and other documents and all
information which any thereof is permitted or required to give or
furnish to the Owner Trustee pursuant to any Operative Document
(including pursuant to Section 10 of the Lease), (ii) to exercise
inspection rights pursuant to Section 7 of the Lease, (iii) to retain
all rights with respect to insurance maintained for its own account
which Section 12 of the Lease specifically confers on the Owner
Participant and (iv) to exercise, to the extent necessary to enable it
to exercise its rights under Section 4.03 hereof, the rights of the
Owner Trustee under Section 21(d) of the Lease and to give notices of
default under Section 17 of the Lease; and
(d) except as expressly provided to the contrary in clauses (a),
(b) and (c) above, so long as no Indenture Event of Default has occurred
and is continuing, all rights (including options, elections,
determinations, consents, approvals, waivers and the giving of notices)
of the Owner Trustee and the Owner Participant under the Lease shall be
exercised by the Owner Trustee and/or the Owner Participant, as the case
may be, to the exclusion of the Indenture Trustee and any Note Holder
and without the consent of the Indenture Trustee or any Note Holder;
provided that the foregoing shall not, nor shall any other provision of
this Section 5.10, limit (A) any rights separately and expressly granted
to the Indenture Trustee or any Note Holder under the Lease or the other
Operative Documents (including, without limitation, Section 15 of the
Refunding Agreement) or (B) the right of the Indenture Trustee or any
Note Holder to receive any funds to be delivered to the Owner Trustee
under the Lease (except with respect to Excepted Payments).
Notwithstanding the foregoing provisions of this Section 5.10,
but subject always to Section 10.05 hereof and to the rights of the Owner
Participant under Sections 2.12 and 4.03 hereof, the Indenture Trustee shall at
all times have the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) demand, collect, sue for or otherwise receive and enforce
the payment of all Rent due and payable under the Lease (other than any thereof
constituting an Excepted Payment or Excepted Right), (B) declare the Lease to
be in default under Section 18 thereof and (C) subject only to the provisions
of Sections 4.03 and 4.04(a) hereof, exercise the remedies set forth in such
Section 18 (other than in connection with Excepted Payments) and in Article IV
hereof.
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
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delivered to the Indenture Trustee and, if expressly required herein, to the
Owner Trustee. Proof of execution of any instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
(subject to Sections 5.04, 5.05, 6.02 and 6.05) conclusive in favor of the
Indenture Trustee and the Owner Trustee if made in the manner provided in this
Indenture.
SECTION 5.12. Right of Revocation of Action Taken. At any time
prior to (but not after) the evidencing to the Indenture Trustee, as provided
in Section 5.11 hereof, of the taking of any action by the Note Holders of the
percentage in aggregate Principal Amount of the Equipment Notes specified in
this Indenture in connection with such action, any Note Holder which has
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding an Equipment Note, revoke such action so far
as concerns such Equipment Note. Except as aforesaid any such action taken by
the Note Holder shall be conclusive and binding upon such Note Holder and upon
all future Note Holders and owners of such Equipment Note and of any Equipment
Notes issued in exchange or substitution therefor, irrespective of whether or
not any notation in regard thereto is made upon any such Equipment Note. Any
action taken by the Note Holders of the percentage in aggregate Principal
Amount of the Equipment Notes specified in this Indenture in connection with
such action shall be conclusively binding upon the Owner Trustee, the Indenture
Trustee and the Note Holders.
ARTICLE VI
THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. The Indenture
Trustee in its individual capacity accepts the trust hereby created and agrees
to perform the same but only upon the terms of this Indenture. The Indenture
Trustee agrees for the benefit of the Note Holders, the Owner Trustee and the
Owner Participant to receive and disburse all moneys constituting part of the
Trust Indenture Estate in accordance with the terms hereof; and neither the
Trust Company nor the Indenture Trustee in its individual capacity shall be
answerable or accountable under any circumstances, except for its own willful
misconduct or gross negligence (other than for the handling of funds, for which
the standard of accountability shall be negligence), or as provided in the
fourth sentence of Section 2.04(a) hereof and in the last sentence of Section
5.04 hereof, and except for liabilities that may result, in the case of the
Trust Company, 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,
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of the Indenture Trustee made in its individual capacity herein, in the
Refunding Agreement or in any other document. None of the Owner Participant,
the Trust Company or the Indenture Trustee shall be liable for any action or
inaction of any other one of such parties, except, in the case of the Owner
Participant, for any action or omission of the Owner Trustee performed or
omitted on the instructions of the Owner Participant. The Owner Trustee shall
not be deemed a trustee for the Note Holders for any purpose.
SECTION 6.02. Absence of Duties. In the case of the Indenture
Trustee, except in accordance with written instructions furnished pursuant to
Section 5.01, 5.02 or 9.01 hereof, and except as provided in, and without
limiting the generality of, Sections 5.03, 5.04 and 6.09 hereof and, in the
case of the Owner Trustee, except as provided in Section 4.01(b), 6.09 or 9.01
hereof and in the Trust Agreement, the Lease and the Refunding Agreement, the
Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any
registration of the Aircraft or any recording or filing of the Lease or of this
Indenture or any other document, or to see to the maintenance of any such
registration, recording or filing, (ii) to see to any insurance on the
Aircraft, whether or not the Lessee shall be in default with respect thereto,
(iii) to see to the payment or discharge of any Lien of any kind against any
part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify
or inquire into the failure to receive any financial statements of the Lessee
or (v) to inspect the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of the Lessee's covenants under the Lease or
any of the Permitted Sublessee's covenants under any Assigned Sublease with
respect to the Aircraft.
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE (INDIVIDUALLY OR AS INDENTURE
TRUSTEE) NOR THE OWNER TRUSTEE NOR THE TRUST COMPANY MAKES OR SHALL BE DEEMED
TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE (EXCEPT AS SET FORTH IN SECTION
5(a) OF THE LEASE), AIRWORTHINESS, VALUE, WORKMANSHIP, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
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
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to have made any representation or warranty as to the validity, legality or
enforceability of this Indenture, the Trust Agreement, the Equipment Notes or
any Indenture Documents or as to the correctness of any statement contained in
any thereof, except for the representations and warranties of the Trust Company
and the Indenture Trustee in its individual capacity or as Indenture Trustee
made under this Indenture or in the other Operative Documents.
SECTION 6.04. No Segregation of Moneys; No Interest. Any moneys
paid to or retained by the Indenture Trustee pursuant to any provision hereof
and not then required to be distributed to any Note Holder, the Lessee or the
Owner Trustee as provided in Article III hereof need not be segregated in any
manner except to the extent required by law, and may be deposited under such
general conditions as may be prescribed by law, and the Indenture Trustee shall
not (except as otherwise provided in Section 3.07 hereof) be liable for any
interest thereon; provided that any payments received or applied hereunder by
the Indenture Trustee shall be accounted for by the Indenture Trustee so that
any portion thereof paid or applied pursuant hereto shall be identifiable as to
the source thereof.
SECTION 6.05. Reliance; Agents; Advice of Counsel. Neither the
Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee and the Indenture Trustee may accept a copy of a
resolution of the Board of Directors of any party to the Refunding Agreement,
certified by the Secretary or an Assistant Secretary thereof as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted and that the same is in full force and effect. As to the
aggregate unpaid Principal Amount of Equipment Notes outstanding as of any
date, the Owner Trustee may for all purposes hereof rely on a certificate
signed by any Vice President or other authorized corporate trust officer of the
Indenture Trustee. As to any fact or matter relating to the Lessee the manner
of 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
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thereto. In the administration of the trusts hereunder, the Owner Trustee and
the Indenture Trustee each may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or (except in the case of the
Indenture Trustee's obligations under the third sentence of Section 2.04(a))
through agents or attorneys and shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due care
hereunder. The Indenture Trustee may, at the expense of the Trust Indenture
Estate, consult with counsel, accountants and other skilled Persons to be
selected and retained by it, and the Owner Trustee and the Indenture Trustee
shall not be liable for anything done, suffered or omitted in good faith by
them in accordance with the written advice or written opinion of any such
counsel, accountants or other skilled Persons.
SECTION 6.06. Capacity in Which Acting. The Owner Trustee acts
hereunder solely as trustee under the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided herein.
SECTION 6.07. Compensation. The Indenture Trustee shall be
entitled to reasonable compensation (which compensation shall not (to the
extent permitted by applicable law) be limited by any provision of law in
regard to the compensation of a trustee of an express trust), including
expenses, advances and disbursements, for all services rendered hereunder, and
shall have a first priority claim (prior to the Note Holders) on the Trust
Indenture Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by the Lessee, and shall have the right to use
or apply any moneys held by it hereunder in the Trust Indenture Estate toward
such payments. The Indenture Trustee agrees that it shall have no right
against any Note Holder or the Owner Participant for any fee as compensation
for its services as trustee under this Indenture.
SECTION 6.08. May Become Note Holder. Each of the institutions
acting as Owner Trustee and Indenture Trustee hereunder may become a Note
Holder and have all rights and benefits of a Note Holder to the same extent as
if it were not the institution acting as Owner Trustee or Indenture Trustee, as
the case may be.
SECTION 6.09. Further Assurances; Financing Statements. At any
time and from time to time, upon the request of the Indenture Trustee, the
Owner Trustee shall promptly and duly execute and deliver any and all such
further instruments and documents as may be specified in such request and as
are necessary or desirable to perfect, preserve or protect the mortgage,
security interests and assignments created or intended to be created hereby, or
to obtain for the Indenture Trustee the full benefit of the specific rights and
powers herein granted, including, without limitation, the execution and
delivery of Uniform Commercial Code financing statements and continuation
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statements with respect thereto, or similar instruments relating to the
perfection of the mortgage, security interests or assignments created or
intended to be created hereby.
ARTICLE VII
INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification. The Owner Trustee, not
individually but solely in its capacity as owner trustee under the Trust
Agreement, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated but except as otherwise provided in Section 2.03
hereof, to assume liability for, and does hereby indemnify, protect, save and
keep harmless the Indenture Trustee, in its individual capacity and as
Indenture Trustee, and its successors, permitted assigns, agents and servants
solely from the Trust Estate, from and against any and all liabilities,
obligations, losses, damages, penalties, taxes (excluding any taxes payable by
the Indenture Trustee on or measured by any compensation received by the
Indenture Trustee for its services under this Indenture), claims, actions,
suits, and reasonable out-of-pocket costs, expenses or disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Indenture Trustee (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
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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,
partner, 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
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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 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 separate trustee, as the case
may be, to take such action as may be so requested, approved or consented to.
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(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 in any material respect and (iii)
the Lessee may effect the re-registration of the Aircraft in accordance with
but always subject to the terms and conditions applicable thereto specified in
Section 11 of the Refunding Agreement and Section 6(e) of the Lease and the
Indenture Trustee may approve any Permitted Sublessee as provided in clause (c)
of the definition of such term set forth in the Lease and may exercise the
rights of the Indenture Trustee under Section 15 of the Refunding Agreement.
For the avoidance of doubt, nothing in this Section 9.01 shall limit in any way
the rights of the Owner Trustee and/or the Owner Participant under Section
5.10(d) to exercise certain rights and powers under the Lease to the exclusion
of the Indenture Trustee and any Note Holder and without the consent of the
Indenture Trustee or any Note Holder.
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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 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
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than permitted under Section 2.10 hereof, (v) modify any of the provisions of
Section 4(b) of the Lease, or modify, amend or supplement the Lease, any
Assigned Sublease or any Sublease Assignment, or consent to any assignment of
any thereof, in either case releasing the Lessee (or Permitted Sublessee) from
its obligations in respect of the payment of Basic Rent or Stipulated Loss
Value for the Aircraft or altering the absolute and unconditional character of
the obligations of Lessee to pay Rent as set forth in Sections 4(b) and 4(d) of
the Lease (or comparable provisions in any Assigned Sublease) or (vi) permit
the creation of any Lien on the Trust Indenture Estate or any part thereof
other than Permitted Liens or deprive any Note Holder of the benefit of the
Lien of this Indenture on the Trust Indenture Estate, except as provided in
connection with the exercise of remedies under Article IV hereof.
(c) At any time after the date of the consummation of the
Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter
into one or more agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i)(A) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as
Note Holder) or (B) to cure any ambiguity or correct any mistake; (ii) to
evidence the succession of another party as the Owner Trustee in accordance
with the terms of the Trust Agreement or to evidence the succession of a new
trustee hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee or to make any other provisions with
respect to matters or questions arising hereunder so long as such action shall
not adversely affect the interests of the Note Holders in its capacity solely
as Note Holder or impose upon the Lessee any additional indemnification
obligations; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Indenture, the Airframe or Engines or any
Replacement Airframe or Replacement Engine; (v) to add to the covenants of the
Owner Trustee for the benefit of the Note Holders, or to surrender any rights
or powers herein conferred upon the Owner Trustee, the Owner Participant or the
Lessee; (vi) to add to the rights of the Note Holders; and (vii) to include on
the Equipment Notes any legend as may be required by law.
(d) Without the consent of the Lessee no amendment or
supplement to this Indenture or waiver or modification of the terms hereof
shall adversely affect the Lessee in any material respect or impose upon the
Lessee any additional indemnification obligations.
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SECTION 9.02. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Indenture Trustee, the Owner Trustee
and the Note Holders shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for all and any
purposes.
SECTION 9.03. Documents to Be Given to Trustee. The Indenture
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel as conclusive evidence
that any supplemental indenture referred to in Section 9.01 complies with the
applicable provisions of this Indenture.
SECTION 9.04. Notation on Notes in Respect of Supplemental
Indentures. Equipment Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation in form approved by the Indenture Trustee as to any matter
provided for by such supplemental indenture. If the Owner Trustee or the
Indenture Trustee shall so determine, new Equipment Notes so modified as to
conform, in the opinion of the Owner Trustee and the Indenture Trustee, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Owner Trustee, authenticated by the Indenture Trustee and
delivered in exchange for the Equipment Notes then outstanding.
SECTION 9.05. Trustees Protected. If, in the opinion of the
institution acting as Owner Trustee under the Trust Agreement or the
institution acting as Indenture Trustee hereunder, any document required to be
executed by it pursuant to the terms of this Article IX affects adversely any
right, duty, immunity or indemnity with respect to such institution under this
Indenture, such institution may in its discretion decline to execute such
document.
SECTION 9.06. Documents Mailed to Note Holders. Promptly after
the execution by the Owner Trustee or the Indenture Trustee of any document
entered into pursuant to this Article IX, the Owner Trustee shall mail, by
certified mail, postage prepaid, conformed copies thereof to the Indenture
Trustee (in such quantities as will permit the Indenture Trustee to distribute
one copy to each Note Holder, and the Indenture Trustee shall mail one such
copy to each Note Holder), but the 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
78
<PAGE> 84
all reports, notices, requests, demands, certificates and other instruments
furnished to the Indenture Trustee under the Lease or hereunder to the extent
that the same were not required to have been furnished to such Note Holder
pursuant hereto or to the Lease.
SECTION 9.07. No Request Necessary for Lease Supplement or
Indenture Supplement. Notwithstanding anything contained in this Article IX,
no written request or consent of the Indenture Trustee, any Note Holder or the
Owner Participant pursuant to this Article IX shall be required to enable the
Owner Trustee to enter into any Lease Supplement with the Lessee pursuant to
the terms of the Lease to subject the Aircraft, any Engines or other property
thereto or to release the Aircraft, any Engine or other property therefrom or
to execute and deliver an Indenture Supplement, in each case pursuant to the
terms hereof.
SECTION 9.08. Notices to Liquidity Provider. Any request made
to any Note Holder for consent to any amendment or supplement pursuant to this
Article IX shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Upon payment in full
of the Principal Amount of, Make-Whole Amount, if any, and all accrued and
unpaid interest on and other amounts then due with respect to the Equipment
Notes and provided that there shall then be no other amounts then due to the
Note Holders and the Indenture Trustee hereunder or under the Lease or the
Refunding Agreement or otherwise secured hereby, the Lien of this Indenture
shall be deemed discharged and the security interests in favor of the Indenture
Trustee and the Note Holders hereunder shall terminate, and the Owner Trustee
shall direct the Indenture Trustee to execute and deliver to or as directed in
writing by the Owner Trustee, an appropriate instrument evidencing the
discharge of such Lien and the termination of such security interest in the
Aircraft and release of the Indenture Documents from the assignment and pledge
thereof hereunder, and the Indenture Trustee shall execute and deliver such
instrument as aforesaid and, at the Owner Trustee's expense, will execute and
deliver such other instruments or documents as may be reasonably requested by
the Owner Trustee to give effect to such discharge, termination and release;
provided, however, that this Indenture and the trusts created hereby shall
earlier terminate and this Indenture shall be of no further force or effect as
expressly provided pursuant to Article X hereof or upon any sale or other final
disposition by the Indenture Trustee of all property part 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,
79
<PAGE> 85
this Indenture and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders. No Note Holder shall have legal title to any part of the Trust
Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this
Indenture or entitle such Note Holder or any successor or transferee of such
Holder to an accounting or to the transfer to it of legal title to any part of
the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Indenture Trustee is Binding.
Any sale or other conveyance of the Aircraft by the Indenture Trustee made
pursuant to the terms of this Indenture or of the Lease shall bind the Note
Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and
such Holders in and to the Aircraft. No purchaser or other grantee shall be
required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Indenture Trustee.
SECTION 10.04. Indenture for Benefit of Owner Trustee, Indenture
Trustee, Owner Participant, Lessee and Note Holders. Nothing in this
Indenture, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Indenture Trustee, the Owner Participant, the
Note Holders, the Lessee and, with respect to any provisions hereof requiring
payment to any Permitted Sublessee, such Permitted Sublessee, any legal or
equitable right, remedy or claim under or in respect of this Indenture.
SECTION 10.05. No Action Contrary to Lessee's Rights Under the
Lease. Notwithstanding any of the provisions of this Indenture or the Trust
Agreement to the contrary, each of the Note Holders, the Indenture Trustee and
the Owner Trustee agrees for the benefit of the Lessee that it will not take
any action contrary to the Lessee's rights under the Lease, including the right
of the Lessee to possession and use and quiet enjoyment of the Aircraft, except
in accordance with the provisions of the Lease.
SECTION 10.06. Notices. Unless otherwise expressly specified
herein, all notices, requests, demands, authorizations, 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
80
<PAGE> 86
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 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
81
<PAGE> 87
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.
82
<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture, as amended and restated, to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first above written,
and acknowledge that this Indenture has been made and delivered in The City of
New York.
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:
--------------------------------
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity, except as expressly
provided herein, but solely as Indenture
Trustee
By:
--------------------------------
Title:
83
<PAGE> 89
EXHIBIT A
to
First Amended and Restated
Trust Indenture and Security Agreement
[GPA 1989 BN-11]
TRUST INDENTURE SUPPLEMENT NO. __________
[GPA 1989 BN-11]
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_11] 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_
11] dated as of December 19, 1989, as amended and restated as of June __, 1997
(as so amended and restated, the "Indenture") between the Owner Trustee and The
Chase Manhattan Bank (formerly known as Chemical Bank, successor by merger to
Manufacturers Hanover Trust Company), as Indenture Trustee (the "Indenture
Trustee"), provides for the execution and delivery of a supplement thereto
substantially in the form hereof which shall particularly describe the Aircraft
(such term and other defined terms in the Indenture being herein used with the
same meanings) and any Replacement Airframe or Replacement Engine included in
the Trust Indenture Estate, and shall specifically mortgage such Aircraft,
Replacement Airframe or Replacement Engine, as the case may be, to the
Indenture Trustee.
WHEREAS (1), the Original Indenture, as supplemented by Trust
Indenture Supplement No. 1 dated December 29, 1989 subjected to the Lien of
such Original Indenture the airframe and engines described therein, which
Original Indenture and Trust Indenture Supplement No. 1 have been duly recorded
with the Federal Aviation Administration on January 3, 1990, as one document
and assigned Conveyance No. V78689.
WHEREAS (2), the Indenture relates to the Airframe and Engines
described below and a counterpart of the Indenture is attached hereto and made
a part hereof and this Indenture Supplement, together with such counterpart of
the Indenture, is being filed for recordation on the date hereof with the
Federal Aviation Administration as one document.
- ---------------------------------
(1) This recital to be included in the each Indenture Supplement.
(2) This recital is to be included only in Indenture Supplement No. 2.
<PAGE> 90
WHEREAS (3), the Owner Trustee has, as provided in the
Indenture, heretofore executed and delivered to the Indenture
Trustee [(4)] 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:
<TABLE>
<CAPTION>
Date Recordation Date FAA Document No.
---- ---------------- ---------------
<S> <C> <C>
</TABLE>
NOW, THEREFORE, This Supplement Witnesseth, that, to secure the
prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to, all Equipment Notes from time
to time outstanding under the Indenture and the performance and observance by
the Owner Trustee of all the agreements, covenants and provisions contained in
the Indenture and the Refunding Agreement and the Equipment Notes, for the
benefit of the Note Holders, and the prompt payment of any and all amounts from
time to time owing under the Refunding Agreement by the Owner Trustee, the
Owner Participant and the Lessee in each case to the Note Holders and for the
uses and purposes and subject to the terms and provisions of the Indenture, and
in consideration of the premises and of the covenants contained in the
Indenture, and of the acceptance of the Equipment Notes by the Holders thereof,
and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or
before the delivery of the Indenture, the receipt whereof is hereby
acknowledged, the Owner Trustee has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Indenture Trustee, its successors and assigns, for the security and benefit of
the Note Holders from time to time, in the trust created by the Indenture, a
first priority security interest in and mortgage Lien on all estate, right,
title and interest of the Owner Trustee in, to and under the following
described property:
- ------------------------------
(3) This recital not to be included in Indenture Supplement No. 2.
(4) Insert appropriate number.
2
<PAGE> 91
AIRFRAME(S)
( ) airframe(s) identified as follows:
FAA Registration Manufacturer's
<TABLE>
<CAPTION>
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, 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-11]
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.
3
<PAGE> 92
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.
4
<PAGE> 93
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:
5
<PAGE> 94
SCHEDULE I
<TABLE>
<CAPTION>
MATURITY
PRINCIPAL AMOUNT DATE DEBT RATE
---------------- ---- ---------
<S> <C> <C> <C>
Series A...... $
Series B...... $
Series C...... $
Series D...... $
</TABLE>
<PAGE> 95
EQUIPMENT NOTES AMORTIZATION
SERIES A
Aircraft: N632AW
<TABLE>
<Caption
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 96
SERIES B
Aircraft: N632AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 97
SERIES C
Aircraft: N632AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 98
SERIES D
Aircraft: N632AW
<TABLE>
<CAPTION>
Principal Amount Percentage of Original
Repayment Date Amount to be Paid
---------------- ----------------------
<S> <C>
</TABLE>
<PAGE> 99
SCHEDULE II
PASS THROUGH TRUST AGREEMENTS
1. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1A, dated June __, 1997.
2. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1B, dated June __, 1997.
3. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1C, dated June __, 1997.
4. Pass Through Trust Agreement, dated as of June __, 1997, between America
West Airlines, Inc., and Fleet National Bank, as supplemented by Trust
Supplement No. 1997-1D, dated June __, 1997.
Schedule II-1
<PAGE> 1
EXHIBIT 5.1
[ANDREWS & KURTH L.L.P. LETTERHEAD]
June 2, 1997
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 1997-1 Pass Through Trusts Pass Through
Certificates, Series 1997-1
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. 333-27351) (such Registration Statement, as amended, the
"Registration Statement") originally filed on May 16, 1997 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 1997-1 (the
"Certificates"). Each Certificate will represent a fractional undivided
interest in one of the four America West Airlines 1997-1 Pass Through Trusts
(collectively, the "Trusts") to be formed pursuant to a pass through trust
agreement (the "Basic Agreement") and four 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
<PAGE> 2
America West Airlines, Inc.
June 2, 1997
Page 2
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 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
EXHIBIT 8.1
[ANDREWS & KURTH L.L.P. LETTERHEAD]
June 2, 1997
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 1997-1 Pass Through Trusts Pass Through
Certificates, Series 1997-1
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. 333-27351) (the "Registration Statement") filed on May 16,
1997, 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 1997-1 (the "Certificates"). Each Certificate will
represent a fractional undivided interest in one of the four America West
Airlines 1997-1 Pass Through Trusts (collectively, the "Trusts") to be formed
pursuant to a pass through trust agreement (the "Basic Agreement") and four
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 four 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
<PAGE> 2
America West Airlines, Inc.
June 2, 1997
Page 2
executed and delivered by each of the parties thereto and that the Notes 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 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 L.L.P. LETTERHEAD]
June 2, 1997
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
four separate pass through trusts (the "Pass Through Trusts") to be created
under Pass Through Trust Agreement 1997-1 (the "Pass Through Trust Agreement"),
and four 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. 333-27351 (the "Registration Statement"), 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 assumptions 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.
<PAGE> 2
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 the banking and trust powers of Fleet National Bank.
Very truly yours,
/s/ SHIPMAN & GOODWIN LLP
Shipman & Goodwin LLP
- 2 -
<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
------------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31, PERIOD FROM
-------------------- --------------------- AUGUST 26 TO
1997 1996 1996 1995 DECEMBER 31, 1994
------ ------ ------ ------ ----------------------
<S> <C> <C> <C> <C>
Computation of Earnings:
Income (loss) before income taxes
and extraordinary item $ 25,918 $ 25,420 $ 34,493 $ 108,378 $19,736
Add:
Interest expense including amortization
of debt expense 12,172 12,385 49,678 59,418 22,827
Interest portion of rent expense 25,640 21,945 93,539 83,680 26,879
-------- -------- -------- --------- -------
Income (loss), as adjusted $ 63,730 $ 59,750 $177,710 $ 251,476 $69,442
======== ======== ======== ========= =======
Computation of Fixed Charges:
Interest expense including amortization
of debt expense $ 12,172 $ 12,385 $ 49,678 $ 59,418 $22,827
Interest portion of rent expense 25,640 21,945 93,539 83,680 26,879
Capitalized interest -- 606 -- 2,666 621
-------- -------- -------- --------- -------
Fixed charges $ 37,812 $ 34,936 $143,217 $ 145,764 $50,327
======== ======== ======== ========= =======
Ratio of earnings to fixed charges 1.69 1.71 1.24 1.73 1.38
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
-------------------------------------------
YEAR ENDED
PERIOD FROM DECEMBER 31,
JANUARY 1 TO -----------------------
AUGUST 25, 1994 1993 1992
--------------- ------ -------
<S> <C> <C> <C>
Computation of Earnings:
Income (loss) before income taxes
and extraordinary item $(201,209) $37,924 $(131,761)
Add:
Interest expense including amortization
of debt expense 34,038 54,252 55,886
Interest portion of rent expense 51,538 81,795 102,314
--------- -------- ---------
Income (loss), as adjusted $(115,633) $173,971 $ 26,439
========= ======== =========
Computation of Fixed Charges:
Interest expense including amortization
of debt expense $ 34,038 $ 54,252 $ 55,886
Interest portion of rent expense 51,538 81,795 102,314
Capitalized interest -- -- --
--------- -------- ---------
Fixed charges $ 85,576 $136,047 $ 158,200
========= ======== =========
Ratio of earnings to fixed charges (*) 1.28 (*)
</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 capitalized interest. For the period ended August 25, 1994 earnings
were insufficient to cover fixed charges by $201.2 million. For the year
ended December 31, 1992 earnings were insufficient to cover fixed charges
by $131.8 million.
<PAGE> 1
EXHIBIT 25.1
UNITED STATES
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)
Not applicable 06-0850628
---------------------------- ------------------
(State of incorporation if (I.R.S. Employer
not a national bank) Identification No.)
777 Main Street, Hartford, Connecticut 06115
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Patricia Beaudry, 777 Main Street, Hartford, CT (860) 728-2065
------------------------------------------------------------------
(Name, address and telephone number of agent for service)
AMERICA WEST AIRLINES, INC.
------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
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)
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. If the obligor is an affiliate of
the trustee, describe each such affiliation.
None with respect to the trustee; none with respect to Fleet
Financial Group, Inc. and its affiliates (the "affiliates").
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 and the Certification of Fiduciary Powers.
3. A copy of the By-laws of the trustee as now in effect.
4. Consent of the trustee required by Section 321(b) of
the Act.
5. A copy of the latest Consolidated Report of Condition
and Income of the trustee, published pursuant to law or the requirements
of its supervising or examining authority.
<PAGE> 3
NOTES
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base its answer to Item 2, the answer to said
Item is based upon incomplete information. Said Item may, however, be
considered correct unless amended by an amendment to this Form T-1.
<PAGE> 4
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
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 21st day of May, 1997.
FLEET NATIONAL BANK,
Trustee
By /s/ Philip G. Kane, Jr.
-------------------------------------
Name: Philip G. Kane, Jr.
Title: Vice President
<PAGE> 5
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> 6
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> 7
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
<PAGE> 8
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
- --------------------------------------------------
Dated at , as of .
--------------------------------------- --------------------
Revision of February 15, 1996
<PAGE> 9
EXHIBIT 2
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 bookkeeper 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 attained 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.
-2-
<PAGE> 11
Section 3. General Powers. The Board of Directors shall exercise all the
corporate powers of the Association, except as expressly limited by law, and
shall have the control, management, direction and disposition 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-liability
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 Committee 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 lieu 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.
-4-
<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
Community 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 committees 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.
-5-
<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.
-6-
<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.
-7-
<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.
A true copy
Attest:
Secretary/Assistant Secretary
- ---------------------------------------
Dated at , as of .
--------------------------------------- ----------------------
Revision of January 11, 1993
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<PAGE> 18
[LOGO] Exhibit 3
- -------------------------------------------------------------------------------
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 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 and exercise Fiduciary Powers 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
[SEAL]
District of Columbia, this 11th day of
March, 1997.
/s/
----------------------
Comptroller of the Currency
<PAGE> 19
EXHIBIT 4
CONSENT OF THE TRUSTEE
REQUIRED BY SECTION 321(b)
OF THE TRUST INDENTURE ACT OF 1939
The undersigned, as Trustee under an Indenture to be entered into
between America West Airlines, Inc. and Fleet National Bank, 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,
Trustee
By /s/ Philip G. Kane, Jr.
-------------------------------------
Name: Philip G. Kane, Jr.
Title: Vice President
Dated: May 21, 1997
<PAGE> 20
[FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL LETTERHEAD]
- -------------------------------------------------------------------------------
Please refer to page i,
[LOGO] Table of Contents, for 1
the required disclosure
of estimated burden.
- -------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES - FFIEC 031
(961231)
REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 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
January 23, 1997
- -----------------
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 [02499] Banks should affix the address label in
----------- this space.
(RCRI 9050)
Fleet National Bank
---------------------------------------
Legal Title of Bank (TEXT 9010)
One Monarch Place
---------------------------------------
City (TEXT 9131)
Springfield, MA 01102
---------------------------------------
State Abbrev. Zip Code
(TEXT 9200) (TEXT 9220)
<PAGE> 21
FFIEC 031
Consolidated Reports of Condition and Income for a Bank With Page i
Domestic and Foreign Offices 2
- -------------------------------------------------------------------------------
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 be 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 by savings banks)
<PAGE> 22
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> 23
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
CONSOLIDATED REPORT OF INCOME
FOR THE PERIOD JANUARY 1, 1996-DECEMBER 31, 1996
ALL REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR YEAR-TO-DATE BASIS IN THOUSANDS OF DOLLARS.
SCHEDULE RI--INCOME STATEMENT
I480 (-
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income: //////////////////
a. Interest and fee income on loans: //////////////////
(1) In domestic offices: //////////////////
(a) Loans secured by real estate................................................. 4011 1,092,992 1.a.(1)(a)
(b) Loans to depository institutions............................................. 4019 1,482 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers.......... 4024 501 1.a.(1)(c)
(d) Commercial and industrial loans.............................................. 4012 1,132,500 1.a.(1)(d)
(e) Acceptances of other banks................................................... 4026 264 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expeditures: //////////////////
(1) Credit cards and related plans............................................ 4054 16,485 1.a.(1)(f)(1)
(2) Other.................................................................... 4055 189,926 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 10,381 1.a.(1)(h)(2)
(i) All other loans in domestic offices.......................................... 4058 147,087 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4059 4,161 1.a.(2)
b. Income from lease financing receivables: //////////////////
(1) Taxable leases................................................................... 4505 152,848 1.b.(1)
(2) Tax-exempt leases................................................................ 4307 1,511 1.b.(2)
c. Interest income on balances due from depository instituions: (1) //////////////////
(1) In domestic offices.............................................................. 4105 1,644 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 422,212 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 6,495 1.d.(2)(b)
(3) Other domestic debt securities................................................... 3657 12,976 1.d.(3)
(4) Foreign debt securities.......................................................... 3658 6,621 1.d.(4)
(5) Equity securities (including investments in mutual funds)........................ 3659 17,504 1.d.(5)
e. Interest income from trading assets.................................................. 4069 479 1.e.
------------------
</TABLE>
- ----------
(1) Includes interest income on time certificates of deposit not held for
trading.
<PAGE> 24
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RI--CONTINUED
Dollar Amounts in Thousands Year-to-date
RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income (continued)
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 25,839 1.f.
g. Total interest income (sum of items 1.a through 1.f) ................ 4107 3,244,050 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 13,070 2.a.(1)(a)
(b) Nontransaction accounts: //////////////////
(1) Money market deposit accounts (MMDAs) ................... 4509 257,330 2.a.(1)(b)(1)
(2) Other savings deposits .................................. 4511 48,169 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more ........ 4174 170,575 2.a.(1)(b)(3)
(4) All other time deposits ................................. 4512 403,831 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs .......................................... 4172 100,766 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 282,599 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading //////////////////
liabilities, and other borrowed money ............................... 4185 161,582 2.c.
d. Interest on mortgage indebtedness and obligations under capitalized //////////////////
leases .............................................................. 4072 859 2.d.
e. Interest on subordinated notes and debentures ....................... 4200 69,434 2.e.
f. Total interest expense (sum of items 2.a through 2.e) ............... 4073 1,508,215 2.f.
3. Net interest income (item 1.g minus 2.f) .............................. ////////////////// RIAD 4074 1,735,835 3.
4. Provisions: //////////////////
a. Provision for loan and lease losses ................................. ////////////////// RIAD 4230 (6,834) 4.a.
b. Provision for allocated transfer risk ............................... ////////////////// RIAD 4243 0 4.b.
5. Noninterest income: //////////////////
a. Income from fiduciary activities .................................... 4070 295,272 5.a.
b. Service charges on deposit accounts in domestic offices ............. 4080 222,313 5.b.
c. TRADING REVENUE (MUST EQUAL SCHEDULE RI, SUM OF MEMORANDUM //////////////////
ITEMS 8.a THROUGH 8.d) .............................................. A220 25,253 5.c.
d. Other foreign transaction gains (losses) ............................ 4076 346 5.d.
e. Not applicable //////////////////
f. Other noninterest income: //////////////////
(1) Other fee income ................................................ 5407 797,631 5.f.(1)
(2) All other noninterest income* ................................... 5408 350,869 5.f.(2)
g. Total noninterest income (sum of items 5.a through 5.f) ............. ////////////////// RIAD 4079 1,691,684 5.g.
6. a. Realized gains (losses) on held-to-maturity securities .............. ////////////////// RIAD 3521 52 6.a.
b. Realized gains (losses) on available-for-sale securities ............ ////////////////// RIAD 3196 12,071 6.b.
7. Noninterest expense: //////////////////
a. Salaries and employee benefits ...................................... 4135 645,873 7.a.
b. Expenses of premises and fixed assets (net of rental income) //////////////////
(excluding salaries and employee benefits and mortgage interest ..... 4217 211,199 7.b.
c. Other noninterest expense* .......................................... 4092 1,243,839 7.c.
d. Total noninterest expense (sum of items 7.a through 7.c) ............ ////////////////// RIAD 4093 2,100,911 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 1,345,565 8.
9. Applicable income taxes (on item 8) .................................... ////////////////// RIAD 4302 548,252 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 //////////////////
minus 9) ............................................................... ////////////////// RIAD 4300 797,313 10.
- ------------
*Describe on Schedule RI-E--Explanations.
</TABLE>
4
<PAGE> 25
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RI--CONTINUED
Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <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 797,313 12.
----------------------------------------------------
</TABLE>
<TABLE>
I481 (-
------------
Memoranda Year-to-date
------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <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 2,891 M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices //////////////////
(included in Schedule RI, item 8)............................................................ 8431 46,475 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 12,425 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 5,738 M.8.a.
b. Foreign exchange exposures............................................................... 8758 19,515 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 2,698 M.9.a.
b. Net (increase) decrease to interest expense.............................................. 8762 (4,902) M.9.b.
c. Other (noninterest) allocations.......................................................... 8763 12 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> 26
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
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> <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 797,313 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 11,688 7.
8. LESS: Cash dividends declared on common stock............................................ 4460 761,473 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 (4,870) 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 4,519,112 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> <C> <C>
1. Loans secured by real estate: ////////////////// //////////////////
a. To U.S. addressees (domicile)................................... 4651 65,946 4661 16,055 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 69 4665 105 3.
4. Commercial and industrial loans: ////////////////// //////////////////
a. To U.S. addressees (domicile)................................... 4645 73,869 4617 43,048 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 2,356 4666 1,468 5.a.
b. Other (includes single payment, installment, and all student
loans).............................................................. 4657 29,089 4667 5,303 5.b.
6. Loans to foreign governments and official institutions.............. 4643 0 4627 0 6.
7. All other loans..................................................... 4644 5,253 4628 965 7.
8. Lease financing receivables: ////////////////// //////////////////
a. Of U.S. addressees (domicile)................................... 4658 12,926 4668 4,622 8.a.
b. Of non-U.S. addressees (domicile)............................... 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8).................................... 4635 189,508 4605 71,668 9.
</TABLE>
6
<PAGE> 27
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RI-B--CONTINUED
PART I. CONTINUED
(Column A) (Column B)
Charge-offs Recoveries
-------------------------------------
Calendar-year-to-date
-------------------------------------
Memoranda
Dollar Amounts in Thousands RIAD BIL MIL THOU RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <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 714 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 266 3583 337 M.5.a.
b. Secured by farmland............................................... 3584 145 3585 304 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 4,428 5412 619 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties.. 5413 31,124 5414 3,602 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties.......... 3588 5,579 3589 590 M.5.d.
e. Secured by nonfarm nonresidential properties...................... 3590 24,404 3591 10,603 M.5.e.
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
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 71,668 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above)................................ 4635 189,508 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a)...................... 4230 (6,834) 4.
5. Adjustments* (see instructions for this schedule)........................................... 4815 634,542 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, //////////////////
item 4.b)................................................................................... 3123 776,811 6.
------------------
- ------------
*Describe on Schedule RI-E--Explanations.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RI-C--APPLICABLE INCOME TAXES BY TAXING AUTHORITY
SCHEDULE RI-C IS TO BE REPORTED WITH THE DECEMBER REPORT OF INCOME.
I489
-----------------
Dollar Amounts in Thousands RIAD BIL MIL THOU
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Federal................................................................................... 4780 461,184 1.
2. State and local........................................................................... 4790 87,068 2.
3. Foreign................................................................................... 4795 0 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b)........ 4770 548,252 4.
5. Deferred portion of item 4............................................ RIAD 4772 274,648 ////////////////// 5.
------------------
</TABLE>
7
<PAGE> 28
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
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> <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.............................................................. 4038 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.
</TABLE>
<TABLE>
<CAPTION>
memoranda Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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>
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
<TABLE>
<CAPTION>
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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> 29
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RI-E--EXPLANATIONS
SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDER YEAR-TO-DATE BASIS.
Detail all adjustments in Schedule 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> <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 147,813 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 278,276 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 296,172 2.e.
f. TEXT 4467 INTERCOMPANY DATA PROCESSING & PROGRAMMING CHARGES 4467 315,897 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> 30
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RI-E--CONTINUED
-------------------
Year-to-date
-------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 636,497 8.a.
b. TEXT 4522 DIVESTED ALLOWANCE RELATED TO SOLD LOANS ................................. 4522 (1,955) 8.b.
9. Other explanations (the space below is provided for the bank to briefly describe, at its -------------------
option, any other significant items affecting the Report of Income): I498 | I499 <-
No comment [X] (RIAD 4769) -------------------
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE> 31
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 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> <C>
ASSETS //////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////////
a. Noninterest-bearing balances and currency and coin (1) ........................... 0081 3,923,408 1.a.
b. Interest-bearing balances(2) ..................................................... 0071 68,691 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... 1754 261,390 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ..................... 1773 4,958,338 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 25,709 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 31,260,436 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ................... RCFD 3123 776,811 ////////////////// 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 30,483,625 4.d.
5. Trading assets (from Schedule RC-D) ................................................. 3545 73,333 5.
6. Premises and fixed assets (including capitalized leases) ............................ 2145 536,686 6.
7. Other real estate owned (from Schedule RC-M) ........................................ 2145 18,911 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 6,380 9.
10. Intangible assets (from Schedule RC-M) .............................................. 2143 2,316,633 10.
11. Other assets (from Schedule RC-F) ................................................... 2160 3,907,689 11.
12. Total assets (sum of items 1 through 11) ............................................ 2170 46,580,793 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> 32
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC--CONTINUED
-----------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 32,792,158 13.a.
(1) Noninterest-bearing(1) .............................. RCON 6631 10,359,674 /////////////////////// 13.a.(1)
(2) Interest-bearing .................................... RCON 6636 22,432,484 /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from ///////////////////////
Schedule RC-E, part II ............................................................ RCFN 2200 2,414,427 13.b.
(1) Noninterest-bearing ................................. RCFN 6631 51,133 /////////////////////// 13.b.(1)
(2) Interest-bearing .................................... RCFN 6636 2,363,294 /////////////////////// 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 2,999,129 14.a.
b. Securities sold under agreements to repurchase .................................... RCFD 0279 119,013 14.b.
15. a. Demand notes issued to the U.S. Treasury .......................................... RCON 2840 2,393 15.a.
b. Trading liabilities (from Schedule RC-D) .......................................... RCFD 3548 60,855 15.b.
16. Other borrowed money: ///////////////////////
a. WITH A REMAINING MATURITY OF ONE YEAR OR LESS ..................................... RCFD 2332 304,551 16.a.
b. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR ................................... RCFD 2333 631,435 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ....................... RCFD 2910 11,267 17.
18. Bank's liability on acceptances executed and outstanding ............................. RCFD 2920 6,380 18.
19. Subordinated notes and debentures .................................................... RCFD 3200 1,213,219 19.
20. Other liabilities (from Schedule RC-G) ............................................... RCFD 2930 1,506,854 20.
21. Total liabilities (sum of items 13 through 20) ....................................... RCFD 2948 42,061,681 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 1,813,664 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ............ RCFD 8434 9,034 26.b.
27. Cumulative foreign currency translation adjustments .................................. RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) .................................... RCFD 3210 4,519,112 28.
29. Total liabilities, limited-life preferred stock, and equity capital ///////////////////////
(sum of items 21, 22, and 28)......................................................... RCFD 3300 46,580,793 29.
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.
---------------------
</TABLE>
1 - Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 - Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 - Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 - Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 - Review of the bank's financial statements by external auditors
6 - Compilation of the bank's financial statements by external auditors
7 - Other audit procedures (excluding tax preparation work)
8 - No external audit work
- ------------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
12
<PAGE> 33
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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]
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 RCFD BIL MIL THOU
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and ////////////////// //////////////////
coin ................................................................... 0022 3,548,380 ////////////////// 1.
a. Cash items in process of collection and unposted debits.............. ////////////////// 0020 2,693,954 1.a.
b. Currency and coin ................................................... ////////////////// 0080 854,426 1.b.
2. Balances due from depository institutions in the U.S.................... ////////////////// 0082 87,601 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 87,676 ////////////////// 2.b.
3. Balances due from banks in foreign countries and foreign central banks.. ////////////////// 0070 12,440 3.
a. Foreign branches of other U.S. banks................................. 0073 208 ////////////////// 3.a.
b. Other banks in foreign countries and foreign central banks........... 0074 12,491 ////////////////// 3.b.
4. Balances due from Federal Reserve Banks................................. 0090 343,344 0090 343,344 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 3,992,099 0010 3,991,765 5.
--------------------------------------
-----------------
Memorandum Dollar Amounts in Thousands RCON BIL MIL THOU
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Non interest-bearing balances due from commercial banks in the U.S. (included in item 2, //////////////////
column B above) ............................................................................ 0050 71,678 M.1.
------------------
SCHEDULE RC-B--SECURITIES
Exclude assets held for trading.
--------
C410 (-
------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Amortized Cost Amortized Cost Amortized Cost
------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD BIL MIL THOU RCFD BIL MIL THOU RCFD BIL MIL THOU RCFD BIL MIL THOU
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. U.S. Treasury securities......... 0211 250 0213 250 1286 715,535 1287 718,580 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 500 1298 500 2.b.
------------------------------------------------------------------------------
- ------------
(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.
</TABLE>
13
<PAGE> 34
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
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 RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states ////////////////// ////////////////// ////////////////// //////////////////
and political subdivisions in the ////////////////// ////////////////// ////////////////// //////////////////
U.S.: ////////////////// ////////////////// ////////////////// //////////////////
a. General obligations........... 1676 151,418 1677 151,394 1678 0 1679 0 3.a.
b. Revenue obligations........... 1681 12,415 1686 12,419 1690 0 1691 0 3.b.
c. Industrial development ////////////////// ////////////////// ////////////////// //////////////////
and similar obligations....... 1694 0 1695 0 1696 0 1697 0 3.c.
4. Mortage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (MBS): ////////////////// ////////////////// ////////////////// //////////////////
a. Pass-through securities ////////////////// ////////////////// ////////////////// //////////////////
(1) Guaranteed by ////////////////// ////////////////// ////////////////// //////////////////
GNMA..................... 1698 0 1699 0 1701 792,519 1702 790,901 4.a.(1)
(2) Issued by FNMA ////////////////// ////////////////// ////////////////// //////////////////
and FHLMC................ 1703 0 1705 0 1706 3,163,278 1707 3,176,341 4.a.(2)
(3) Other pass-through ////////////////// ////////////////// ////////////////// //////////////////
securities............... 1709 0 1710 0 1711 1 1713 1 4.a.(3)
b. Other mortgage-backed ////////////////// ////////////////// ////////////////// //////////////////
securities (include CMOs, ////////////////// ////////////////// ////////////////// //////////////////
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 453 1736 453 4.b.(3)
5. Other debt securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Other domestic debt ////////////////// ////////////////// ////////////////// //////////////////
securities................... 1737 0 1738 0 1739 629 1741 621 5.a.
b. Foreign debt ////////////////// ////////////////// ////////////////// //////////////////
securities................... 1742 97,307 1743 87,332 1744 0 1746 0 5.b.
6. Equity securities: ////////////////// ////////////////// ////////////////// //////////////////
a. Investments in mutual ////////////////// ////////////////// ////////////////// //////////////////
funds........................ ////////////////// ////////////////// 1747 52,843 1748 52,843 6.a.
b. Other equity securities ////////////////// ////////////////// ////////////////// //////////////////
with readily determinable ////////////////// ////////////////// ////////////////// //////////////////
fair values.................. ////////////////// ////////////////// 1749 0 1751 0 6.b.
c. All other equity ////////////////// ////////////////// ////////////////// //////////////////
securities(1)................ ////////////////// ////////////////// 1752 218,098 1753 218,098 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 261,390 1771 251,395 1772 4,943,856 1773 4,958,338 7.
----------------------------------------------------------------------------------
</TABLE>
- -----------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE> 35
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-B--CONTINUED
--------
C412 (-
------------------
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Pledged securities(2).......................................................................... 0416 2,436,831 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 44,985 M.2.a.(1)
(2) Over three months through 12 months..................................................... 0344 105,214 M.2.a.(2)
(3) Over one year through five years........................................................ 0345 1,418,544 M.2.a.(3)
(4) Over five years ........................................................................ 0346 2,274,468 M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a(1) through 2.a.(4)........ 0347 3,843,211 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: //////////////////
(1) Quarterly or more frequently............................................................ 4544 302,855 M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly......................... 4545 802,642 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually.................. 4551 79 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 1,105,576 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 4,948,787 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 4,000 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)................................................................................... //////////////////
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 account 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.
- ----------------
(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.
</TABLE>
15
<PAGE> 36
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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 ------------
reported in this schedule. Report total loans and leases, net of unearned C415 (-
income. Exclude assets held for trading. --------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
--------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RFCD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Loans secured by real estate............................................ 1410 11,606,306 ////////////////// 1.
a. Construction and land development.................................... ////////////////// 1415 599,823 1.a.
b. Secured by farmland (including farm residential and other ////////////////// //////////////////
improvements)........................................................ ////////////////// 1420 1,990 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 1,906,776 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: ////////////////// //////////////////
(a) Secured by first liens....................................... ////////////////// 5367 4,239,378 1.c.(2)(a)
(b) Secured by junior liens...................................... ////////////////// 5368 616,562 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties............ ////////////////// 1460 473,710 1.d.
e. Secured by nonfarm nonresidential properties......................... ////////////////// 1480 3,768,067 1.e.
2. Loans to depository institutions: ////////////////// //////////////////
a. To commercial banks in the U.S. ..................................... ////////////////// 1505 76,227 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 76,227 ////////////////// 2.a.(2)
b. To other depository institutions in the U.S. ........................ 1517 13,345 1517 13,345 2.b.
c. To banks in foreign countries........................................ ////////////////// 1510 928 2.c.
(1) To foreign branches of other U.S. banks.......................... 1513 160 ////////////////// 2.c.(1)
(2) To other banks in foreign countries.............................. 1516 768 ////////////////// 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers..... 1590 4,351 1590 4,351 3.
4. Commercial and industrial loans: ////////////////// //////////////////
a. To U.S. addressees (domicile)........................................ 1763 12,626,132 1763 12,574,435 4.a.
b. To non-U.S. addressees (domicile).................................... 1764 78,513 1764 31,092 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 2,101,041 6.
a. Credit cards and related plans (includes check credit and other ////////////////// //////////////////
revolving credit plans).............................................. 2008 94,750 ////////////////// 6.a.
b. Other (includes single payment, installment, and all student loans).. 2011 2,006,291 ////////////////// 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 149,176 2107 149,176 8.
9. Other loans ............................................................ 1563 2,018,484 ////////////////// 9.
a. Loans for purchasing or carrying securities (secured and unsecured).. ////////////////// 1545 179,603 9.a.
b. All other loans (exclude consumer loans)............................. ////////////////// 1564 1,838,881 9.b.
10. Lease financing receivables (net of unearned income).................... ////////////////// 2165 2,585,933 10.
a. Of U.S. addressees (domicile) ....................................... 2182 2,585,933 ////////////////// 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 31,260,436 2122 31,161,318 12.
--------------------------------------
</TABLE>
16
<PAGE> 37
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-C--CONTINUED
PART I. CONTINUED
(Column A) (Column B)
Consolidated Domestic
Bank Offices
Memoranda ------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 1,681 M.2.a.(1)
(2) To non-U.S. addressees (domicile)......................................... 1689 0 M.2.a.(2)
b. All other loans and lease financing receivable (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 with a remaining maturity of: //////////////////
(1) Three months or less...................................................... 0348 690,294 M.3.a.(1)
(2) Over three months through 12 months....................................... 0349 566,523 M.3.a.(2)
(3) Over one year through five years.......................................... 0356 2,658,468 M.3.a.(3)
(4) Over five years........................................................... 0357 5,501,645 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum //////////////////
items 3.a.(1) through 3.a.(4))............................................ 0358 9,416,930 M.3.a.(5)
b. Floating rate loans with a repricing frequency of: //////////////////
(1) Quarterly or more frequently.............................................. 4554 17,235,629 M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly........... 4555 3,186,865 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than //////////////////
annually.................................................................. 4561 977,978 M.3.b.(3)
(4) Less frequently than every five years..................................... 4564 129,282 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) //////////////////
through 3.b.(4)........................................................... 4567 21,529,754 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 30,946,684 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 0 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 335,734 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 //////////////////
residential properties (included in Schedule RC-C, part I, item 1.c.(2)(a), ////////////////// RCON Bil Mil Thou
column B, page RC-6)............................................................. ////////////////// 5370 1,841,822 M.6.
</TABLE>
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in RC-C, part I,
item 1, column A.
17
<PAGE> 38
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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> <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 64,043 11.a.
b. In foreign offices.................................................................... RCFN 3544 9,290 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)........ RCFD 3545 73,333 12.
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES //////// Bil Mil Thou
----------------------
<S> <C> <C> <C>
13. Liability for short positions............................................................ RFCD 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and //////////////////////
equity contracts......................................................................... RFCD 3547 60,855 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b)... RCFD 3548 60,855 15.
</TABLE>
18
<PAGE> 39
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-E--DEPOSIT LIABILITIES
PART I. DEPOSITS IN DOMESTIC OFFICES
--------------
C425
--------------
Nontransaction
Transactions 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> <C> <C> <C>
Deposits of: ////////////////// ////////////////// //////////////////
1. Individuals, partnerships, and corporations..... 2201 8,925,633 2240 8,417,538 2346 21,118,482 1.
2. U.S. Government................................. 2202 170,644 2280 170,617 2520 5,680 2.
3. States and political subdivisions in the U.S.... 2203 531,934 2290 508,362 2530 777,806 3.
4. Commercial banks in the U.S..................... 2206 836,406 2310 836,406 2550 397 4.
5. Other depository institutions in the U.S........ 2207 223,383 2312 223,383 2349 2,868 5.
6. Banks in foreign countries...................... 2213 23,850 2320 23,850 2236 0 6.
7. Foreign governments and official institutions ////////////////// ////////////////// //////////////////
(including foreign central banks)............... 2216 0 2300 0 2377 0 7.
8. Certified and official checks................... 2330 175,075 2330 175,075 ////////////////// 8.
9. Total (sum of items 1 through 8) (sum of columns ////////////////// ////////////////// //////////////////
A and C must equal Schedule RC, item 13.a....... 2215 10,886,925 2210 10,355,231 2385 21,905,233 9.
----------------------------------------------------------------
</TABLE>
Memoranda
<TABLE>
Dollar Amounts in Thousands RCON Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <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 2,607,397 M.1.a.
b. Total brokered deposits................................................................ 2365 1,415,235 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 2,240 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 1,412,995 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 20 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 584,547 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 346,573 M.1.e.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d //////////////////
must equal item 9, column C above): //////////////////
a. Savings deposits: //////////////////
(1) Money market deposit accounts (MMDAs)............................................. 6810 10,252,364 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs).......................................... 0352 2,397,861 M.2.a.(2)
b. Total time deposits of less than $100,000.............................................. 6648 6,781,917 M.2.b.
c. Time certificates of deposit of $100,000 or more....................................... 6645 2,473,091 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 531,694 M.3.
4. Not applicable
</TABLE>
19
<PAGE> 40
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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)
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <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 1,722,551 M.5.a.(1)
(2) Over three months through 12 months ............................................... A226 3,024,143 M.5.a.(2)
(3) Over one year ..................................................................... A227 1,975,207 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 60,016 M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ................... A229 0 M.5.b.(2)
(3) Les 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 39,531 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 720,549 M.6.a.(1)
(2) Over three months through 12 months ............................................... A233 695,947 M.6.a.(2)
(3) Over one year through five years .................................................. A234 1,014,722 M.6.a.(3)
(4) Over five years ................................................................... A235 8,868 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 33,005 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly ................... A237 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually ............ A238 0 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 1,896 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> 41
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
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> <C>
Deposits of: //////////////////
1. Individuals, partnerships, and corporations.......................................... 2621 2,410,097 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 4,330 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)................. 2200 2,414,427 7.
</TABLE>
<TABLE>
<CAPTION>
------------------
Memorandum Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. TIME DEPOSITS WITH A REMAINING MATURITY OF ONE YEAR OR LESS (INCLUDED IN PART II, //////////////////
ITEM 7 ABOVE)........................................................................ A245 2,414,425 M.1.
</TABLE>
SCHEDULE RC-F--OTHER ASSETS
<TABLE>
<CAPTION>
---------
C430
-----------------------
Dollar Amounts in Thousands ////////// Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Income earned, not collected on loans................................................ RCFD 2164 243,319 1.
2. Net deferred tax assets (1).......................................................... RCFD 2148 0 2.
3. Excess residential mortgage servicing fees receivable................................ RCFD 5371 173,148 3.
4. Other (itemize and describe amounts that exceed 25% of this item).................... RCFD 2168 3,491,222 4.
--------- --------------------
a. TEXT 3549 MORTGAGE HELD FOR RESALE RCFD 3549 1,517,133 /////////////////////// 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 3,907,689 5.
-----------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------
Memorandum Dollar Amounts in Thousands //////////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes.................. RFCD 5610 0 M.1.
</TABLE>
SCHEDULE RC-G--OTHER LIABILITIES
<TABLE>
<CAPTION>
-----------
C435
------------------------
Dollar Amounts in thousands ////////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices (2).................... RCON 3645 50,636 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable)......... RCFD 3646 509,357 1.b.
2. Net deferred tax liabilities(1)....................................................... RCFD 3049 434,426 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 512,435 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 1,506,854 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> 42
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
---------------
SCHEDULE RC-H--SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
C440
------------------
Domestic Offices
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Customers' liability to this bank on acceptances outstanding......................... 2155 6,380 1.
2. Bank's liability on acceptances executed and outstanding............................. 2920 6,380 2.
3. Federal funds sold and securities purchased under agreements to resell............... 1350 25,709 3.
4. Federal funds purchased and securities sold under agreements to repurchase........... 2800 3,118,142 4.
5. Other borrowed money................................................................. 3190 935,986 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 2,311,663 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, //////////////////
and IBFs)............................................................................ 2192 46,468,505 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement //////////////////
subsidiaries, and IBFs).............................................................. 3129 39,637,730 9.
ITEMS 10-17 INCLUDE HELD-TO-MATURITY AND AVAILABLE-FOR-SALE SECURITIES IN DOMESTIC OFFICES.
</TABLE>
<TABLE>
<CAPTION>
------------------
RCON Bil Mil Thou
------------------
<S> <C> <C> <C>
10. U.S. Treasury securities............................................................. 1779 718,830 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed //////////////////
securities).......................................................................... 1785 500 11.
12. Securities issued by states and political subdivisions in the U.S.................... 1786 163,833 12.
13. Mortgage-backed securities (MBS): //////////////////
a. Pass-through securities: //////////////////
(1) Issued or guaranteed by FNMA, FHLMC, OR GNMA................................ 1787 3,967,242 13.a.(1)
(2) Other pass-through securities............................................... 1869 1 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 453 13.b.(2)
14. Other domestic debt securities....................................................... 3159 621 14.
15. Foreign debt securities.............................................................. 3160 97,307 15.
16. Equity securities: //////////////////
a. Investments in mutual funds...................................................... 3161 52,843 16.a.
b. Other equity securities with readily determinable fair values.................... 3162 0 16.b.
c. All other equity securities...................................................... 3169 218,098 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16) 3170 5,219,728 17.
</TABLE>
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
<TABLE>
<CAPTION>
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <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> 43
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-I--SELECTED ASSETS AND LIABILITIES OF IBFs
C445
------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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>
SCHEDULE RC-K--QUARTERLY AVERAGES (1)
C455
------------------
Dollar Amounts in Thousands ///////// Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------
ASSETS ///////////////////////
<S> <C> <C> <C>
1. Interest-bearing balances due from depository institutions...................... RCFD 3381 28,972 1.
2. U.S. Treasury securities and U.S. Government agency and corporation
obligations (2)................................................................. RCFD 3382 5,849,801 2.
3. Securities issued by states and political subdivisions in the U.S. (2).......... RCFD 3383 171,480 3.
4. a. Other debt securities (2)................................................... RCFD 3647 98,635 4.a.
b. Equity securities (3) (includes investments in mutual funds and Federal ///////////////////////
Reserve stock).................................................................. RCFD 3648 290,211 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 34,073 5.
6. Loans:
a. Loans in domestic offices:
(1) Total loans............................................................ RCON 3360 28,772,871 6.a.(1)
(2) Loans secured by real estate........................................... RCON 3385 11,782,561 6.a.(2)
(3) Loans to finance agricultural production and other loans to ///////////////////////
farmers................................................................ RCON 3386 4,568 6.a.(3)
(4) Commercial and industrial loans........................................ RCON 3387 12,208,378 6.a.(4)
(5) Loans to individuals for household, family, and other personal ///////////////////////
expenditures........................................................... RCON 3388 2,106,517 6.a.(5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs... RCFN 3360 93,116 6.b.
7. Trading assets.................................................................. RCFD 3401 70,398 7.
8. Lease financing receivables (net of unearned income)............................ RCFD 3484 2,414,362 8.
9. Total assets(4)................................................................. RCFD 3368 47,043,625 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 554,831 10.
11. Nontransaction accounts in domestic offices: ///////////////////////
a. Money market deposit accounts (MMDAs)....................................... RCON 3486 10,212,141 11.a.
b. Other savings deposits...................................................... RCON 3487 2,477,260 11.b.
c. Time certificates of deposit of $100,000 or more............................ RCON 3345 2,533,067 11.c.
d. All other time deposits..................................................... RCON 3469 6,982,619 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, ///////////////////////
and IBFs........................................................................ RCFN 3404 2,117,139 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 4,817,518 13.
14. Other borrowed money............................................................ RCFD 3355 985,125 14.
- ---------------
(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.
</TABLE>
23
<PAGE> 44
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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]
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> <C> <C>
1. Unused commitments: //////////////////
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home equity //////////////////
lines....................................................................................... 3814 2,159,101 1.a.
b. Credit card lines........................................................................... 3815 37,038 1.b.
c. Commercial real estate, construction, and land development: //////////////////
(1) Commitments to fund loans secured by real estate........................................ 3816 538,163 1.c.(1)
(2) Commitments to fund loans not secured by real estate.................................... 6550 513,346 1.c.(2)
d. Securities underwriting..................................................................... 3817 0 1.d.
e. Other unused commitments.................................................................... 3818 20,572,462 1.e.
2. Financial standby letters of credit and foreign office guarantees.............................. 3819 2,322,445 2.
--------------------
a. Amount of financial standby letters of credit conveyed to others RCFD 3820 89,650 ////////////////// 2.a.
--------------------
3. Performance standby letters of credit and foreign office guarantees............................ 3821 179,230 3.
--------------------
a. Amount of performance standby letters of credit conveyed to others RCFD 3822 6,004 ////////////////// 3.a.
--------------------
4. Commercial and similar letters of credit....................................................... 3411 137,503 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the //////////////////
reporting bank................................................................................. 3428 112 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting //////////////////
(nonaccepting) bank............................................................................ 3429 12,837 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 965,792 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 or the report date............ 3650 298,423 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................... 3651 298,423 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 289,942 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................... 3653 289,942 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 487,442 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.
---------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 45
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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.
--------------------------------------------------------------------------------------------------------------
C461 <-
----------------- ----------------- ----------------- ------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- ---------------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ----------------- ----------------- ----------------- ------------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
---------------------------------------- ----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> C> <C>
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 ................ 0 0 0 39,037 14.a
----------------- ----------------- ----------------- -----------------
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
----------------- ----------------- ----------------- -----------------
b. Forward contracts ................ 2,684,800 2,284,466 0 45,604 14.b
----------------- ----------------- ----------------- -----------------
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
----------------- ----------------- ----------------- -----------------
c. Exchange-traded option contracts: ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
(1) Written options .............. 225,000 0 0 0 14.c.(1)
----------------- ----------------- ----------------- -----------------
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
----------------- ----------------- ----------------- -----------------
(2) Purchased options ............ 1,276,400 0 0 1,245 14.c.(2)
----------------- ----------------- ----------------- -----------------
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
----------------- ----------------- ----------------- -----------------
d. Over-the-counter option contracts: ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
(1) Written options .............. 5,051,792 5,200 0 0 14.d.(1)
----------------- ----------------- ----------------- -----------------
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
----------------- ----------------- ----------------- -----------------
(2) Purchased options ............ 19,427,829 5,200 0 0 14.d.(2)
----------------- ----------------- ----------------- -----------------
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
----------------- ----------------- ----------------- -----------------
e. Swaps ............................ 24,549,614 0 0 0 14.e
----------------- ----------------- ----------------- -----------------
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
----------------- ----------------- ----------------- -----------------
15. Total gross notional amount of ///////////////// ///////////////// ///////////////// /////////////////
derivative contracts held for trading. 5,289,505 2,294,866 0 l,245 15
----------------- ----------------- ----------------- -----------------
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
----------------- ----------------- ----------------- -----------------
l6. Total gross notional amount of ///////////////// ///////////////// ///////////////// /////////////////
derivative contracts held for ///////////////// ///////////////// ///////////////// /////////////////
purposes other than trading: ///////////////// ///////////////// ///////////////// /////////////////
----------------- ----------------- ----------------- -----------------
a. Contracts marked to market ...... 4,239,800 0 0 39,037 16.a.
----------------- ----------------- ----------------- -----------------
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
----------------- ----------------- ----------------- -----------------
b. Contracts not marked to market .. 43,686,130 0 0 45,604 16.b.
----------------- ----------------- ----------------- -----------------
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
----------------- ----------------- ----------------- -----------------
</TABLE>
25
<PAGE> 46
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
Off-balance Sheet Derivatives Contracts Contracts Contracts Other Contracts
Position Indicators ------------------ ------------------ ------------------ ------------------
RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD 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 31,626 8734 41,468 8736 0 8736 59 17.a.(1)
(2) Gross negative ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8737 22,099 8738 38,756 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 2,258 8742 0 8743 0 8744 1,698 17.b.(1)
(2) Gross negative ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8745 1,417 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 165,643 8750 0 8751 0 8752 169 17.c.(1)
(2) Gross negative ////////////////// ////////////////// ////////////////// //////////////////
fair value................ 8737 76,308 8754 0 8755 0 8756 0 17.c.(2)
---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands RFCD 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 18,552,873 M.3.
a. Participations in commitments with an original maturity //////////////////
exceeding one year to be conveyed to others......................... RCFD 3834 | 1,789,549 ////////////////// 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. addresses (domicile) included in Schedule RC-L, items 2 and 3, above................. 3377 360,019 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> 47
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-M--MEMORANDA
--------
C465 (-
------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 552,349 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. RFCD 6165 | 20 ////////////////// 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 25,732,152 4.a.
b. Mortgages services under a FHLMC contract: //////////////////
(1) Serviced with recourse to servicer......................................................... 5501 48,720 4.b.(1)
(2) Serviced without recourse to servicer...................................................... 5502 34,857,978 4.b.(2)
c. Mortgages serviced under a FNMA contract: //////////////////
(1) Serviced under a regular option contract................................................... 5503 249,703 4.c.(1)
(2) Serviced under a special option contract................................................... 5504 41,105,444 4.c.(2)
d. Mortgages serviced under other servicing contracts............................................. 5505 11,267,486 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. addresses (domicile)...................................................................... 2103 6,244 5.a.
b. Non-U.S. addresses (domicile).................................................................. 2104 136 5.b.
6. Intangible assets: //////////////////
a. Mortgage servicing rights...................................................................... 3164 1,563,176 6.a.
b. Other identifiable intangible assets //////////////////
(1) Purchased credit card relationships........................................................ 5506 0 6.b.(1)
(2) All other identifiable intangible assets................................................... 5507 105,984 6.b.(2)
c. Goodwill....................................................................................... 3163 647,473 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)......................... 2143 2,316,633 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 time.
27
<PAGE> 48
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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> <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 332 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 9,789 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices........... RCON 5511 347 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices........................ RCON 5512 8,443 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 18,911 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 204,326 10.a.
b. Equity securities funds.............................................................. RCON 8427 116,418 10.b.
c. Debt securities funds................................................................ RCON 8428 12,837 10.c.
d. Other mutual funds................................................................... RCON 8429 0 10.d.
e. Annuities............................................................................ RCON 8430 103,868 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a. through /////////////////////////
10.e. above)......................................................................... RCON 8784 302,177 10.f.
-------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<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 0 M.1.a.
b. Nonreciprocal holdings of banking organizations' capital instruments........................ 3837 0 M.1.b.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 49
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
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,
column A, and in Memorandum items 2 through 4,
column A, as confidential.
--------
C470
------------------------------------------------------------
(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> <C> <C>
1. Loans secured by real estate: ////////////////// ////////////////// //////////////////
a. To U.S. addressees (domicile) .................... 1245 1246 65,607 1247 215,496 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 0 1583 625 3.
4. Commercial and industrial loans: ////////////////// ////////////////// //////////////////
a. To U.S. addressees (domicile) .................... 1251 1252 12,042 1253 76,393 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 1,574 5385 370 5.a.
b. Other (includes single payment, installment, ////////////////// ////////////////// //////////////////
and all student loans) ........................... 5386 5387 24,812 5388 7,184 5.b.
6. Loans to foreign governments and official ////////////////// ////////////////// //////////////////
institutions ......................................... 5389 5390 0 5391 0 6.
7. All other loans ...................................... 5459 5460 11,122 5461 9,921 7.
8. Lease financing receivables: ////////////////// ////////////////// //////////////////
a. Of U.S. addressees (domicile) .................... 1257 1258 21 1259 3,763 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) ...... 3506 3506 0 3507 32,566 9.
- ---------------------------------------------------------------------------------------------------------------------------------
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
10. Loans and leases reported in items 1 ------------------------------------------------------------
through 8 above which are wholly or partially ////////////////// ////////////////// //////////////////
guaranteed by the U.S. Government .................... 5612 5613 17,347 5614 14,395 10.
a. Guaranteed portion of loans and leases ////////////////// ////////////////// //////////////////
included in item 10 above ........................ 5615 5616 17,056 5617 11,954 10.a.
</TABLE>
29
<PAGE> 50
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RI-N--CONTINUED
--------
C473
------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
and still and still
accruing accruing
Memoranda ------------------ ------------------ ------------------
Dollar Amounts in Thousands RFCD Bil Mil Thou RFCD Bil Mil Thou RFCD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <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 1661 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 105 6560 1,919 M.2.
3. Loans secured by real estate in domestic offices RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
(included in Schedule RC-N, item 1, above): ////////////////// ////////////////// //////////////////
a. Construction and land development................... 2759 2769 0 3492 19,990 M.3.a.
b. Secured by farmland................................. 3493 3494 0 3495 144 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 5,009 5400 10,700 M.3.c.(1)
(2) All other loans secured by 1-4 residential ////////////////// ////////////////// //////////////////
properties...................................... 5401 5402 49,978 5403 100,900 M.3.c.(2)
d. Secured by multifamily (5 or more) residential ////////////////// ////////////////// //////////////////
properties.......................................... 3499 3500 934 3501 9,456 M.3.d.
e. Secured by nonfarm nonresidential properties........ 3502 3503 9,886 3504 74,306 M.3.e.
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------
(Column A) (Column B)
Past due 30 Past due 90
through 89 days days or more
---------------------------------------
RFCD Bil Mil Thou RFCD Bil Mil Thou
---------------------------------------
<S> <C> <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> 51
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-O--OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS
--------
C475 (-
------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Unposted debits (see instructions): //////////////////
a. Actual amount of all unposted debits........................................................ 0030 0 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 0 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 142,277 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 196,951 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries................................... 2351 15,807 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries........................ 5514 0 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, Part I, 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 748 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 1,395,996 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> 52
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
SCHEDULE RC-O--CONTINUED
-------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 will 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.
-------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and //////////////////
1.b.(1) must equal Schedule RC, item 13.a): //////////////////
a. Deposit accounts of $100,000 or less: //////////////////
(1) Amount of deposit accounts of $100,000 or less.................................. 2702 18,219,759 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 N/A ////////////////// M.1.a.(2)
b. Deposit accounts of more than $100,000: //////////////////
(1) Amount of deposit accounts of more than $100,000................................ 2710 14,572,399 M.1.b.(1)
Number //////////////////
(2) Number of deposit accounts of more than $100,000 ............. RCON 2772 28,722 ////////////////// 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 multiplying 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
estimate 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.
</TABLE>
- -------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and Income should be
directed: C477
PAMELA S. FLYNN, VICE PRESIDENT (401) 278-5194
- ------------------------------- ----------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
32
<PAGE> 53
<TABLE>
<CAPTION>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 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]
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> <C> <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 YES NO
appropriate box at the right whether the bank has total capital greater than or --------------------------------
equal to eight percent of adjusted total assets............................................ RCFD 6056 //// 1.
--------------------------------
</TABLE>
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>
- -------------------------------------------------------------------
NOTE: ALL BANKS ARE REQUIRED TO COMPLETE ITEMS 2 AND 3 BELOW.
SEE OPTIONAL WORKSHEET FOR ITEMS 3.a THROUGH 3.f. -----------------------------------------
- ----------------------------------------------------------------------------- (Column A) (Column B)
Dollar Amounts in Thousands Subordinated Debt(1) Other
- ----------------------------------------------------------------------------- and Intermediate Limited-Life
2. Subordinated debt(1) and other limited-life capital instruments (original Term Preferred Stock Capital Instruments
weighted average maturity of at least five years) with a remaining -----------------------------------------
maturity of: RCFD Bil Mil Thou RCFD Bil Mil Thou
-----------------------------------------
<S> <C> <C> <C> <C> <C>
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 341,000 3790 0 2.e.
f. Over five years........................................................ 3785 760,000 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 //////////////////
CONSISTENT WITH APPLICABLE CAPITAL STANDARDS):
-------------------------
RCFD Bil Mil Thou
-------------------------
a. TIER 1 CAPITAL................................................................................ 8274 3,756,621 3.a.
b. TIER 2 CAPITAL................................................................................ 8275 1,688,820 3.b.
c. TOTAL RISK-BASED CAPITAL...................................................................... 3792 5,445,441 3.c.
d. EXCESS ALLOWANCE FOR LOAN AND LEASE LOSSES.................................................... A222 200,236 3.d.
e. RISK-WEIGHTED ASSETS (NET OF ALL DEDUCTIONS, INCLUDING EXCESS ALLOWANCE)...................... A223 45,925,732 3.e.
f. "AVERAGE TOTAL ASSETS" (NET OF ALL ASSETS DEDUCTED FROM TIER 1 CAPITAL)(2).................... A224 46,290,168 3.f.
------------------
</TABLE>
<TABLE>
-----------------------------------------
(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(3)
-----------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
-----------------------------------------
<S> <C> <C> <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 1,519,575 ////////////////// 4.a.(1)
(2) All other.......................................................... 3795 1,316,143 ////////////////// 4.a.(2)
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3796 1,079,527 4.b
</TABLE>
- -------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE> 54
<TABLE>
<CAPTION>
Legal Title of Bank : FLEET NATIONAL BANK Call Date: 12/31/96 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]
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> <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 726,530 ////////////////// 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. Government ////////////////// //////////////////
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 7,055,416 ////////////////// 5.a.(3)
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3801 1,058,252 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 5,371,795 ////////////////// 6.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3803 866,687 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 31,276,374 ////////////////// 7.a.
b. Credit equivalent amount of off-balance sheet items.................... ////////////////// 3805 10,715,771 7.b.
8. On-balance sheet asset values excluded from the calculation of the ////////////////// //////////////////
risk-based capital ratio (2).............................................. 3806 91,771 ////////////////// 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 47,357,604 ////////////////// 9.
--------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Current credit exposure across all off-balance sheet derivative contracts covered by the //////////////////
risk-based capital standards.................................................................. 8764 236,389 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
2. Notional principal amounts of ----------------------------------------------------------------------
off-balance sheet derivative contracts(3): RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
----------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
a. Interest rate contracts................ 3809 7,502,891 8766 33,994,382 8767 779,970 M.2.a.
b. Foreign exchange contracts............. 3812 1,366,429 8769 84,993 8770 0 M.2.b.
c. Gold contracts......................... 8771 33,478 8772 0 8773 0 M.2.c.
d. Other precious metals contracts........ 8774 13,371 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.
----------------------------------------------------------------------
- -----------------
(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 not included
in the calculation of credit equivalent amounts of off-balance sheet derivatives 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.
</TABLE>
34
<PAGE> 55
<TABLE>
<S> <C> <C>
Legal Title of Bank: FLEET NATIONAL BANK Call Date: 12/31/96 ST-BK: 25-0590 FFIEC 031
Address: One Monarch Place Page RC-25
City, State Zip: Springfield, MA 01102
FDIC Certificate No.: [0][2][4][9][9]
</TABLE>
OPTIONAL NARRATIVE STATEMENT CONCERNING THE AMOUNTS
REPORTED IN THE REPORTS OF CONDITION AND INCOME
at close of business on December 31, 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/ Jan 23, 1997
------------------------ ------------------------
Signature of Executive Date of Signature
Officer of Bank
35
